A trading session is the block of hours during which a major financial center is open and active. Forex has four overlapping sessions: Sydney (22:00-07:00 UTC), Tokyo (00:00-09:00 UTC), London (07:00-16:00 UTC), and New York (12:00-21:00 UTC). The market is open continuously from Sunday 22:00 UTC to Friday 22:00 UTC, but volume is heavily concentrated in the London-New York overlap (12:00-16:00 UTC), where the two largest forex centers trade simultaneously and produce the highest volume and tightest spreads of the day.
Each session has a personality. Tokyo trades JPY and AUD pairs actively but is otherwise quiet. London brings volatility on EUR and GBP pairs. New York extends London volatility and adds USD-driven moves around the 13:30 UTC US data releases.
Worked example
A trader running a London breakout strategy waits for the Asian session range to form between 22:00 and 07:00 UTC, then trades the breakout when London opens. EUR/USD ranges 30 pips overnight; at 07:00 it breaks 12 pips above the high on rising volume. The trader enters long, targeting the next round number, with a stop below the Asian range high. The setup only works because session change triggers a measurable volume increase.
Why it matters
Strategy edge often depends on session. Mean-reversion strategies work in low-volume Asian hours; breakout strategies work at session opens. Trading the wrong strategy at the wrong session is a common reason a backtested edge stops working live. See liquidity for the volume mechanics behind these patterns.
Common pitfalls
- Reading session times in local time instead of UTC and missing the actual open by an hour during DST shifts.
- Assuming "London open" means 08:00 GMT every day — DST in the UK shifts it relative to UTC.
- Trading major pairs during Sydney-only hours and being surprised by spread widening.