Global sessions

BASIC - Lesson 2

One of the most exciting and interesting things about the financial markets is the fact that they are open 24 hours a day. This allows traders from all over the world - no matter what time-zone they’re in - to trade during work hours, after work or even throughout the night.

This lesson takes approximately: 10 minutes

In this lesson, we’ll cover:

  • Which periods during the trading session tend to be more volatile than others
  • How liquidity and volatility could influence your trading
  • What flash-crashes are and what could happen if they occur

One of the most exciting and interesting things about the financial markets is the fact that they are open 24 hours a day. This allows traders from all over the world - no matter what time-zone they’re in - to trade during work hours, after work or even throughout the night.

However, trading conditions are not always the same throughout the day. Some parts of the day - or a ‘session’ as they are often referred to - are different than others, and are characterised by greater volatility and bigger liquidity.

It’s virtually impossible to monitor your open positions at all times. With specific periods being more vulnerable to volatility, it’s important to know how your trades could affected throughout the day and minimise your risk accordingly.

When does activity peak?

Generally, there are three established periods when activity typically rises. These are known as the Asian session, the European session, and the US session. (More casually, these periods are also referred to as the Tokyo, London and New York sessions.) This is because these three cities are the biggest financial centers in the world where large, influential institutions are located. When a session in each of these locations open, volatility rises and the market moves. For example, when trading starts in London (around 8:00am GMT) a bigger change in prices can occur. So if you have an open position on EURUSD, you should be aware the European session about to begin.

Different instruments react differently to certain parts of each session. For example, a trader looking at the Australian dollar should know that the currency typically moves most during the Asian session, and again when Wall Street opens. On the other hand, if you trade the Turkish lira you should keep an eye on the market during the European session, but expect lower volatility during the Asian session. This doesn’t just apply to forex - for example, being long or short the DAX means that your profit or loss will fluctuate between 8am - 5pm, but will likely move less over the European night. Each instrument has its own specification that should you know ahead of opening a position.

Expect the unexpected

Although lower liquidity usually leads to a stabilisation in the financial markets, it can result in so-called “flash-crashes” from time to time. In October 2016 the British pound fell by more than 5% in a second after the US session closed, but way ahead of the start of the Asian session. A similar situation happened in March 2016 when the price of gold crashed, only to recover a few seconds later. Such falls can happen for a variety of different reasons, and it’s important to remember that just because a market has acted in a certain way historically, doesn’t mean it’s always going to exhibit the same patterns of behaviour. Make sure you’re always dedicating time to identify the current direction the market is trending in on multiple timeframes.


Self-knowledge is key

When trading currencies and CFDs, you need to first determine which style suits you and your trading personality best. Are you comfortable trading volatile markets on short timeframes, or do you prefer lower liquidity and holding positions over a longer period of time? Do you want to hold your trades overnight, over a period of weeks, days or months?

Decide how much time you can dedicate to trading, and find an approach that best fits you.

This presentation is provided for general information and marketing purposes only. Any opinions, analyses, prices or other content does not constitute investment advice or a recommendation. Any research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.

Past performance is not necessarily indicative of future results, and any person acting on this information does so entirely at their own risk. XTB will not accept liability for any loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.


Test your knowledge of this lesson with our quiz:


Which scenario suggests it was the result of a flash-crash?


Which period tends to be the calmest during a trading session?


Which instruments are the most volatile during the US session?


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Next course: Introduction to Forex

What is forex? Why should you start trading on forex? What are the advantages of leverage? You will find all the answers for these questions in this section.