Trading sessions are periods of time during which the financial markets of a specific region or city are open for trading. This is the period when the market maker takes an active part in trading. On the forex and stock markets, there are several major trading sessions, each associated with different time zones and financial centers.
The most well-known sessions are:
1. Asian (Tokyo) session:
Includes the markets of Tokyo, Hong Kong, and other Asian centers. Volatility increases, but the market is often in a range.
2. Frankfurt session:
Includes the markets of Frankfurt and Berlin. It serves as a supplementary session for the London session.
3. European (London) session:
One of the most active sessions, as London is a major financial center. During this session, high volatility and large trading volumes are observed.
4. American (New York) session:
Another active session, especially when it overlaps with the European session. U.S. news and economic reports often influence volatility and market direction.
We are primarily interested in working within sessions because this is the most volatile and technical time. It is during these periods that potential positions of interest to us are formed. Of course, each session has its own characteristics and unique features, and this knowledge further helps us build the context for the day and open trades based on it.
Let’s break this down with an example.
As you can see, knowledge of trading sessions is fundamental and can provide you with a lot of additional important information, based on which you can look for more precise entry points into a position.