So now we know that the London session is the busiest out of all the other sessions, but there are also certain days in the week where all the markets tend to show more movement.

Know the best days of the week to trade forex.

 

Below is a chart of the average pip range for the major pairs for each day of the week:

 

PAIR SUNDAY MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY
EUR/USD 69 109 142 136 145 144
GBP/USD 73 149 172 152 169 179
USD/JPY 41 65 82 91 124 98
AUD/USD 58 84 114 99 115 111
NZD/USD 28 81 98 87 100 96
USD/CAD 43 93 112 106 120 125
USD/CHF 55 84 119 107 104 116
EUR/JPY 19 133 178 159 223 192
GBP/JPY 100 169 213 179 270 232
EUR/GBP 35 74 81 79 75 91
EUR/CHF 35 55 55 64 87 76

As you can see from the chart above, it’s best to trade during the middle of the week, since this is when the most action happens.

 

Fridays are usually busy until 12:00 pm EST and then the market pretty much drops dead until it closes at 5:00 pm EST. This means we only work half-days on Fridays.

 

The weekend always starts early! Yippee!

So based on all these, we’ve learned when the busiest and best days of the week to trade forex are.

The busiest times are usually the best times to trade since high volatility tends to present more opportunities.

Managing Yo Time Wisely

Unless you’re Edward Cullen, who does not sleep, there is no way you can trade all sessions. Even if you could, why would you?

While the forex market is open 24 hours daily, it doesn’t mean that action happens all the time!

Besides, sleep is an integral part of a healthy lifestyle!

 

You need sleep to recharge and have energy so that you can do even the most mundane tasks like mowing the lawn, talking to your spouse, taking the dog for a walk, or organizing your stamp collection.

 

You’ll definitely need your rest if you plan on becoming a hotshot currency trader.

Every trader should learn when to trade.

Actually, scratch that.

Every trader should know when to trade and when NOT to trade.

Knowing the optimal times you should trade and the times when you should sit out and just play some Fortnite instead.

Here’s a quick cheat sheet of the best and worst times to trade:

Best Times to Trade:

  • When two sessions are overlapping of course! These are also the times where major news events come out to potentially spark some volatility and directional movements. Make sure you bookmark the Market Hours cheat sheet to take note of the Opening and Closing times.
  • The European session tends to be the busiest out of the three.
  • The middle of the week typically shows the most movement, as the pip range widens for most of the major currency pairs.

Worst Times to Trade:

  • Sundays – everyone is sleeping or enjoying their weekend!
  • Fridays – liquidity dies down during the latter part of the U.S. session.
  • Holidays – everybody is taking a break.
  • Major news events – you don’t want to get whipsawed!
  • When you just broke up with your significant other because you chose trading forex over him or her. Wait until the next London session instead.

Can’t seem to trade during the optimal sessions? Don’t fret.

You can always be a swing or position trader. We’ll get back to that later.

Meanwhile, let’s move on to how you actually make money trading currencies. Excited? You should be!

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What does this have to do with trading sessions? Well, just like TV, “ratings” (a.k.a. liquidity) are at their highest when there are more people participating in the markets.

Forex Trading Session Overlaps

Logically, you would think that this happens during the overlap between the two sessions.

 

If you thought that way, you’d only be half-right.

 

Let’s discuss some of the characteristics of the two overlap sessions to see why.

Tokyo – London Overlap

Tokyo-London Overlap

Liquidity during this session is pretty thin for a few reasons. Typically, there isn’t as much movement during the Asian session so, once the afternoon hits, it’s pretty much a snooze fest. Zzzzzz.

 

With European traders just starting to get into their offices, trading can be boring as liquidity dries up.

 

This would be an ideal time to take a chill pill, play some putt-putt golf, or look for potential trades to take for the London and New York sessions.

London – New York Overlap

London-New York Overlap

According to the latest data from FXLIQUIDITY, an analytics service for the FX market, liquidity is at an optimum level around 10 am and 3 pm London time (10 am NY time).

This is when the real shebang begins! You can literally hear traders crack their knuckles during this time because they know they have their work cut out for them.

 

This is the busiest time of day, as traders from the two largest financial centers (London and New York) begin duking it out.

 

It is during this period where we can see some big moves, especially when news reports from the U.S. and Canada are released.

The markets can also be hit by “late” news coming out of Europe.

If any trends were established during the European session, we could see the trend continue, as U.S. traders decide to jump in and establish their positions after reading up what happened earlier in the day.

Lastly, it’s important to know that it is during this period where the WM/Refinitiv Spot Benchmark Rate is determined. The rate is set at 4 pm London time, and also known as the “London fix”.

A currency “fixing” is a set time each day when the prices of currencies for commercial transactions are set, or fixed.

Since currency prices fluctuate from second to second, a daily “reference point” is needed.

Banks and other financial institutions use this daily rate to set their currency exchange rates, which in turn determine the prices used in corporate foreign exchange transactions.

From a trading standpoint, this daily fix may see a flurry of trading in the market prior (generally 15 to 30 minutes) to the fixing time that abruptly disappears exactly at the fixing time.

Lastly, some European traders may be closing their positions as their day ends, which could lead to some choppy moves right before lunchtime in the U.S.

Right as European traders are getting back from their lunch breaks, the U.S. session begins at 8:00 am EST as traders start rolling into the office.

Just like Asia and Europe, the U.S. session has one major financial center that the markets keep their eyes on.

 

We’re talking of course, about the “City That Never Sleeps!

 

New York City baby! The concrete jungle where dreams are made of!

About 17% of all forex transactions happen in New York. 

Some traders also refer to the New York session as the “North American” trading session.

That’s because aside from New York, there are major financial centers open in North America as well, such as Toronto and Chicago.

Here are some tips you should know about trading during the New York session:

  • There is high liquidity during the morning, as it overlaps with the European session.
  • Most economic reports are released near the start of the New York session. Remember, about 85% of all trades involve the dollar, so whenever big-time U.S. economic data is released, it has the potential to move the markets.
  • Once European markets close shop, liquidity, and volatility tend to die down during the afternoon U.S. session.
  • There is very little movement Friday afternoon, as Asian traders are out singing in karaoke bars while European traders head off to the pub to watch the soccer match.
  • Also on Fridays, there is the chance of reversals in the second half of the session, as U.S. traders close their positions ahead of the weekend, in order to limit exposure to any weekend news.
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While there are several financial centers all around Europe, it is London that market participants keep their eyes on.

London Session

Historically, London has always been at a center of trade, thanks to its strategic location.

Today, London benefits from its timezone. London’s morning overlaps with late trading in Asia and London’s afternoon overlap with New York City.

 

It’s no wonder that it is considered the forex capital of the world with thousands of folks making transactions every single minute.

 

About 43% of all forex transactions happen in London.

Some traders also refer to the London session as the “European” trading session.

That’s because aside from London, there are major financial centers open in Europe as well, such as Geneva, Frankfurt, Zurich, Luxembourg, Paris, Hamburg, Edinburgh, and Amsterdam.

Here are some neat facts about the European session:

  • Because the London session crosses with the two other major trading sessions–and with London being such a key financial center–a large chunk of forex transactions take place during this time. This leads to high liquidity and potentially lower transaction costs, i.e., lower pip spreads.
  • Due to the large number of transactions that take place, the London trading session is normally the most volatile session.
  • Most trends begin during the London session, and they typically will continue until the beginning of the New York session.
  • Volatility tends to die down in the middle of the session, as traders often go off to eat lunch before waiting for the New York trading period to begin.
  • Trends can sometimes reverse at the end of the London session, as European traders may decide to lock in profits.

The opening of the Tokyo session at 12:00 am GMT marks the start of currency trading in Asia.

You should take note that the Tokyo session is sometimes referred to as the Asian session. 

One thing worth noting is that Japan is the third-largest forex trading center in the world.

This shouldn’t be too surprising since the yen is the third most traded currency, partaking in 16.8% of all forex transactions.

Overall, around 20% of all forex trading volume takes place during the Asian session.

It’s not all coming from just Tokyo though. There are other major financial centers in Asia such as Singapore and Hong Kong.

What’s interesting is that nowadays, more forex trading volume comes out of Singapore and Hong Kong than Tokyo.

Both Singapore and Hong Kong comprised 7.6% of overall volume each, while Japan had 4.5%.

همبستگی ارز

It’s time to learn about the different forex trading sessions.

Forex Trading Sessions

Yes, it is true that the forex market is open 24 hours a day, but that doesn’t mean it’s always active the entire day.

You can make money trading when the market moves up, and you can even make money when the market moves down.

BUT you will have a very difficult time trying to make money when the market doesn’t move at all.

And believe us, there will be times when the market is as still as the victims of Medusa.

 

This lesson will help determine when the best times of the day are to trade.

Forex Market Hours

Forex Market Hours

Before looking at the best times to trade, we must look at what a 24-hour day in the forex world looks like.

The forex market can be broken up into four major trading sessions: the Sydney session, the Tokyo session, the London session, and Trump’s favorite time to tweet (before he was banned), the New York session.

Historically, the forex market has three peak trading sessions.

Traders often focus on one of the three trading periods, rather than attempt to trade the markets 24 hours per day.

This is known as the “forex 3-session system“.

These sessions consist of the AsianEuropean, and North American sessions, which are also called TokyoLondon, and New York sessions.

Some traders prefer to differentiate sessions by names of the continent, other traders prefer to use the names of the cities.

(We prefer using city names but continents are cool also.)

DID YOU KNOW? The combined share of the top four trading centers, which includes London, New York, Singapore, and Hong Kong amounts to 75% of global FX turnover.

The International Dateline is where, by tradition, the new calendar day starts.

Since New Zealand is a major financial center, the forex markets open there on Monday morning, while it is still Sunday in most of the world.

Even though trading starts in New Zealand, it’s still called the Sydney session. Makes no sense but we don’t make the rules.

Until Friday, there is no time during the week when the market formally closes, although there is a brief lull in activity between about 19:00 and 22:00 GMT when most American traders have gone home and most Kiwi and Aussie traders are getting ready for work.

Other than the weekends, there are just two public holidays when the entire forex market is closed, Christmas and New Year’s Day.

Below are tables of the open and close times for each session:

Spring/Summer in the U.S. (March/April – October/November)

LOCAL TIME EDT BST (GMT+1)
Sydney Open – 7:00 AMSydney Close  – 4:00 PM 5:00 PM2:00 AM 10:00 PM7:00 AM
Tokyo Open – 9:00  AMTokyo Close – 6:00 PM 8:00 PM5:00 AM 1:00 AM10:00 AM
London Open – 8:00 AMLondon Close – 4:00 PM 3:00 AM11:00 AM 8:00 AM4:00 PM
New York Open – 8:00 AMNew York Close – 5:00 PM 8:00 AM5:00 PM 1:00 PM10:00 PM

Fall/Winter in the U.S. (October/November – March/April)

LOCAL TIME EST GMT
Sydney Open – 7:00 AMSydney Close  – 4:00 PM 3:00 PM12:00 AM 8:00 PM5:00 AM
Tokyo Open – 9:00  AMTokyo Close – 6:00 PM 7:00 PM4:00 AM 12:00 AM9:00 AM
London Open – 8:00 AMLondon Close – 4:00 PM 3:00 AM11:00 AM 8:00 AM4:00 PM
New York Open – 8:00 AMNew York Close – 5:00 PM 8:00 AM5:00 PM 1:00 PM10:00 PM

Actual open and close times are based on local business hours, with most business hours starting somewhere between 7-9 AM local time.

Daylight Savings Time

Open and close times will also vary during the months of October/November and March/April as some countries (like the United States, England, and Australia) shift to/from daylight savings time (DST).

The day of the month that a country shifts to/from DST also varies, confusing us even more.  And Japan doesn’t observe daylight savings, so thank you Japan for keeping it simple.

Now, you’re probably looking at the Sydney Open and wondering why it shifts two hours in the Eastern Timezone.

You’d think that Sydney’s Open would only move one hour when the U.S. adjusts for standard time, but remember that when the U.S. shifts one hour back, Sydney actually moves forward by one hour (seasons are opposite in Australia).

Keep this in mind if you ever plan to trade during that time period.

Dealing with DST is a pain but that’s what happens when a market trades around the clock!

It’s important to remember that the forex market’s opening hours will change in March, April, October, and November, as countries move to daylight savings on different days.

Trading Session Overlaps

Also take notice that in between each forex trading session, there is a period of time where two sessions are open at the same time.

For example, during the summer, from 3:00-4:00 AM ET, the Tokyo session and London session overlap

And during both summer and winter from 8:00 AM-12:00 PM ET, the London session and the New York session overlap.

Naturally, these are the busiest times during the trading day because there is more volume when two markets are open at the same time.

This makes sense because, during those times, all the market participants are wheelin’ and dealin’, which means that more money is transferring hands.

Now let’s take a look at the average pip movement of the major currency pairs during each forex trading session.

PAIR TOKYO LONDON NEW YORK
EUR/USD 76 114 92
GBP/USD 92 127 99
USD/JPY 51 66 59
AUD/USD 77 83 81
NZD/USD 62 72 70
USD/CAD 57 96 96
USD/CHF 67 102 83
EUR/JPY 102 129 107
GBP/JPY 118 151 132
AUD/JPY 98 107 103
EUR/GBP 78 61 47
EUR/CHF 79 109 84

From the table, you will see that the London session normally provides the most movement.

Notice how some currency pairs have much larger pip movements than others.

Let’s buy U.S. dollars and sell Swiss francs.

  1. The rate you are quoted is 1.4525 / 1.4530. Because you are buying U.S. dollars you will be working on the “ASK” price of 1.4530, the rate at which traders are prepared to sell.
  2. So you buy 1 standard lot (100,000 units) at 1.4530.
  3. A few hours later, the price moves to 1.4550 and you decide to close your trade.
  4. The new quote for USD/CHF is 1.4550 / 1.4555. Since you initially bought to open the trade, to close the trade, you now must sell in order to close the trade so you must take the “BID” price of 1.4550. The price that traders are prepared to buy at.
  5. The difference between 1.4530 and 1.4550 is .0020 or 20 pips.
  6. Using our formula from before, we now have (.0001/1.4550) x 100,000 = $6.87 per pip x 20 pips = $137.40

Bid/Ask Spread

Remember, when you enter or exit a trade, you are subject to the spread in the bid/ask quote.

When you buy a currency, you will use the offer or ASK price. 

When you sell, you will use the BID price.

Next up, we’ll give you a roundup of the freshest forex lingos you’ve learned!

You are probably wondering how a small investor like yourself can trade such large amounts of money.

Think of your broker as a bank that basically fronts you $100,000 to buy currencies.

All the bank asks from you is that you give it $1,000 as a good faith deposit, which it will hold for you but not necessarily keep.

Sounds too good to be true? This is how forex trading using leverage works.

The amount of leverage you use will depend on your broker and what you feel comfortable with.

Typically the broker will require a deposit, also known as “margin“.

Once you have deposited your money, you will then be able to trade. The broker will also specify how much margin is required per position (lot) traded.

For example, if the allowed leverage is 100:1 (or 1% of position required), and you wanted to trade a position worth $100,000, but you only have $5,000 in your account.

 

No problem as your broker would set aside $1,000 as a deposit and let you “borrow” the rest.

Of course, any losses or gains will be deducted or added to the remaining cash balance in your account.

The minimum security (margin) for each lot will vary from broker to broker.

In the example above, the broker required a 1% margin. This means that for every $100,000 traded, the broker wants $1,000 as a deposit on the position.

Let’s say you want to buy 1 standard lot (100,000) of USD/JPY. If your account is allowed 100:1 leverage, you will have to put up $1,000 as margin.

The $1,000 is NOT a fee, it’s a deposit.

You get it back when you close your trade.

The reason the broker requires the deposit is that while the trade is open, there’s the risk that you could lose money on the position!

Assuming that this USD/JPY trade is the only position you have open in your account, you would have to maintain your account’s equity  (absolute value of your trading account) of at least $1,000 at all times in order to be allowed to keep the trade open.

If USD/JPY plummets and your trading losses cause your account equity to fall below $1,000, the broker’s system would automatically close out your trade to prevent further losses.

This is a safety mechanism to prevent your account balance from going negative.

Understanding how margin trading works is so important that we have dedicated a whole section to it later in the School.

It is a must-read if you don’t want to blow up your account!

Moving on for now…

Forex is commonly traded in specific amounts called lots, or basically the number of currency units you will buy or sell.

A “lot” is a unit measuring a transaction amount.

When you place orders on your trading platform, orders are placed in sizes quoted in lots.

It’s like an egg carton (or egg box in British English). When you buy eggs, you usually buy a carton (or box). One carton includes 12 eggs.

The standard size for a lot is 100,000 units of currency, and now, there are also mini, micro, and nano lot sizes that are 10,000, 1,000, and 100 units.

LOT NUMBER OF UNITS
Standard 100,000
Mini 10,000
Micro 1,000
Nano 100
الگو ی انبرک

Here is where we’re going to do a little math. Just a little bit.

You’ve probably heard of the terms “pips,” “points“, “pipettes,” and “lots” thrown around, and now we’re going to explain what they are and show you how their values are calculated.

Learn About Pips in Forex

Take your time with this information, as it is required knowledge for all forex traders.

 

Don’t even think about trading until you are comfortable with pip values and calculating profit and loss.

 

What the heck is a Pip?

The unit of measurement to express the change in value between two currencies is called a “pip.”

If EUR/USD moves from 1.1050 to 1.1051, that .0001 USD rise in value is ONE PIP.

A pip is usually the last decimal place of a price quote.

Most pairs go out to 4 decimal places, but there are some exceptions like Japanese yen pairs (they go out to two decimal places).

For example, for EUR/USD, it is 0.0001, and for USD/JPY, it is 0.01.

Pip

What is a Pipette?

There are forex brokers that quote currency pairs beyond the standard “4 and 2” decimal places to “5 and 3” decimal places.

They are quoting FRACTIONAL PIPS, also called “points” or “pipettes.”

If the concept of a “pip” isn’t already confusing enough for the new forex trader, let’s try to make you even more confused and point out that a “point” or “pipette” or “fractional pip” is equal to a “tenth of a pip“.

For instance, if GBP/USD moves from 1.30542 to 1.30543, that .00001 USD move higher is ONE PIPETTE.

Pipette

Here’s how fractional pips look like on a trading platform:

Fractional Pip

On trading platforms, the digit representing a tenth of a pip usually appears to the right of the two larger digits.

Here’s a pip “map” to help you to learn how to read pipspip cheat sheet

How to Calculate the Value of a Pip

As each currency has its own relative value, it’s necessary to calculate the value of a pip for that particular currency pair.

In the following example, we will use a quote with 4 decimal places.

For the purpose of better explaining the calculations, exchange rates will be expressed as a ratio (i.e., EUR/USD at 1.2500 will be written as “1 EUR / 1.2500 USD”)

Example #1: USD/CAD = 1.0200

To be read as 1 USD to 1.0200 CAD (or 1 USD/1.0200 CAD)

(The value change in counter currency) times the exchange rate ratio = pip value (in terms of the base currency)

[.0001 CAD] x [1 USD/1.0200 CAD]

Or simply as:

[(.0001 CAD) / (1.0200 CAD)] x 1 USD = 0.00009804 USD per unit traded

 

Using this example, if we traded 10,000 units of USD/CAD, then a one pip change to the exchange rate would be approximately a 0.98 USD change in the position value (10,000 units x 0.00009804 USD/unit).

 

We say “approximately” because as the exchange rate changes, so does the value of each pip move.

Example #2: GBP/JPY = 123.00

Here’s another example using a currency pair with the Japanese Yen as the counter currency.

Notice that this currency pair only goes to two decimal places to measure a 1 pip change in value (most of the other currencies have four decimal places). In this case, a one pip move would be .01 JPY.

(The value change in counter currency) times the exchange rate ratio = pip value (in terms of the base currency)

[.01 JPY] x [1 GBP/123.00 JPY]

Or simply as:

[(.01 JPY) / (123.00 JPY)] x 1 GBP = 0.0000813 GBP

So, when trading 10,000 units of GBP/JPY, each pip change in value is worth approximately 0.813 GBP.

How to Find the Pip Value in Your Trading Account’s Currency

The final question to ask when figuring out the pip value of your position is, “What is the pip value in terms of my trading account’s currency?”

After all, it is a global market and not everyone has their account denominated in the same currency.

 

This means that the pip value will have to be translated to whatever currency our account may be traded in.

This calculation is probably the easiest of all; simply multiply/divide the “found pip value” by the exchange rate of your account currency and the currency in question.

If the “found pip value” currency is the same currency as the base currency in the exchange rate quote:

Using the GBP/JPY example above, let’s convert the found pip value of .813 GBP to the pip value in USD by using GBP/USD at 1.5590 as our exchange rate ratio.

If the currency you are converting to is the counter currency of the exchange rate, all you have to do is divide the “found pip value” by the corresponding exchange rate ratio:

.813 GBP per pip / (1 GBP/1.5590 USD)

Or

[(.813 GBP) / (1 GBP)] x (1.5590 USD) = 1.2674 USD per pip move

So, for every .01 pip move in GBP/JPY, the value of a 10,000 unit position changes by approximately 1.27 USD.

If the currency you are converting to is the base currency of the conversion exchange rate ratio, then multiply the “found pip value” by the conversion exchange rate ratio.

Using our USD/CAD example above, we want to find the pip value of .98 USD in New Zealand Dollars. We’ll use .7900 as our conversion exchange rate ratio:

0.98 USD per pip X (1 NZD/.7900 USD)

Or

[(0.98 USD) / (.7900 USD)] x (1 NZD) = 1.2405 NZD per pip move

For every .0001 pip move in USD/CAD from the example above, your 10,000 unit position changes in value by approximately 1.24 NZD.