The Largest Forex Trading Session – New York
It opens at 8:00 AM EDT and as a result overlaps the London session – the largest of the Forex trading sessions – for a total of four hours. The majority of activity in the New York session is in the first half, oddly enough, precisely at the same time as the London overlap. Remember, in the world of Forex trading, overlaps can work in your favor if you know how to use them and what to watch for.
For a beginner the key to remember here is that just prior to the opening of the New York session many economic indicators and reports are published. What this means is that the impact of this data will be mostly felt on the US Dollar. What that that matter? Well, since the New York market is in the US, which currency do you think sees the bulk of the action during the session? If you guessed the US Dollar you automatically move to the head of the class. In fact, the USD is involved in about 85% of all Forex trades during the New York session. With that kind of percentage it really is proof that sometimes you just have to shop at home and support your own local economy.
London Market Closes
Once the London market closes at 12:00 PM EDT the volatility starts to wane and Fridays in particular as US traders close their positions to lock in their profits before the weekend. Try to keep that in mind if you are trying to build a solid trading strategy. If you consider yourself risk tolerant you may want to focus on these currency pairs: GBP/JPY, EUR/JPY, USD/CAD, GBP/USD and EUR/USD. If volatility is your game, pretty much any pair with the USD is worth watching during the US session with lots of interest generated by foreign investors exchanging their domestic currency for USD.
But to be fair, you don’t need to just be involved in USD trades in order to enjoy the rush of being part of the NY market. That’s because cross pairs also get moved around during this session so if you have a liking for cross pair currencies such as AUD/JPY you can participate but you’ll need to go through two transactions in order to execute a trade. In other words, you’ll be using AUD/USD and USD/JPY combos to supersize your way into AUD/JPY territory.
If you are a bit shy on tolerance the currencies you’ll want to focus on are NZD/USD, AUD/USD, USD/JPY and EUR/GBP. This low volatility brand of pairings are also good for traders looking for long-term trading strategies. You could say that the New York session is a great training ground for traders using this kind of approach as it will give you many opportunities to hone your skills if you are focusing on macro trading or fundamental trading. It’s all good to spend some time throughout your trading career with the US market, even if you do not live anywhere near North America.