Forex · Beginner · 4 min

Trading sessions: Sydney, Tokyo, London, New York

You can describe how forex trading moves around the world through the day, when liquidity is highest, and why spreads widen at quiet times.

Follow the sun

Stock exchanges open in the morning and close in the afternoon. The currency market does not close on weekdays at all. When traders in Tokyo go home, London is starting. When London winds down, New York is in full swing.

But "always open" does not mean "always the same". How busy the market is changes a lot through the day, and that affects spreads, price jumps and the cost of every trade. This lesson walks through a forex day.

Busiest when London meets NY

Forex is traded over the counter, so there is no exchange that opens or closes. The New York Fed describes how trading moves around the globe through the day as financial centers open and close.

Traders usually describe four sessions, named after the main centers. The times are approximate and shift with daylight saving time:

Sydney: the week starts here, Monday morning local time.
Tokyo: the main Asian session, important for yen pairs.
London: the largest trading center. In the BIS survey, the UK accounts for the largest share of global turnover.
New York: the second largest center, busy with US data and dollar pairs.

The busiest period is usually the session overlap of London and New York, in the afternoon in Europe. More dealers quote, books are deeper and spreads are tightest. Many important US data releases also come out during that window.

In quiet hours, for example late in the US afternoon before Asia is fully active, fewer dealers quote. Spreads widen and prices can jump on small orders. At weekends, major dealers largely stop, and news that breaks over the weekend can create a gap when trading resumes.

For private traders, timing affects cost. The same trade can be much cheaper in busy hours than in quiet ones.

0.1 vs. 1.5 pips

A fictional trader watches EUR/USD at a retail broker on a normal weekday.

At 14:00 UTC, London and New York are both active. The spread is 0.1 pips.
At 21:00 UTC, New York is closing, Tokyo has not started. The spread is 1.5 pips.
On Sunday evening, as Sydney opens after weekend news, the pair opens 40 pips away from Friday's close.

On a standard lot, the difference between 0.1 and 1.5 pips is 14 dollars per trade. Repeated many times, timing adds up.

Common mistakes

Thinking forex is equally liquid all day. It is not.
Ignoring daylight saving shifts. Sessions move by an hour in your local time.
Holding positions over the weekend without a plan. Monday can open with a gap.
Trading exotic pairs outside their home session. Spreads are widest then.

The takeaway

Forex trades around the clock on weekdays as activity moves from Asia to Europe to America. Liquidity peaks when London and New York overlap.

Check yourself

Quick quiz

4 questions. Instant feedback, nothing is saved.

1Tap the session that overlaps with London in the afternoon.

Tap the chart.

When New York opens while London is still active, the most participants trade at the same time.
2Are the forex session times fixed by an exchange?

Forex is traded over the counter, so sessions are a convention, and they shift with daylight saving time.
3When are spreads in major pairs often widest?

Fewer active participants mean thinner order books and wider quotes.
4What happens to forex trading at weekends?

Forex trades around the clock on weekdays. News over the weekend can cause a gap when trading resumes.

of 4 correct.