The forex market is the largest financial market in the world. So much so in fact that it is divided into 4 active sessions that stretch across multiple time zones.
These sessions are the Tokyo-Sydney/Asian session, the London/European session, the Pacific session, and the New York/North American session.
Each session exhibits different behaviours in terms of trading volume and level of volatility. Knowing how to manage one’s trades in a way that maximises trading opportunities, regardless of the session, is key. This is what we’ll be discussing in this article.
Managing forex market sessions with an optimised trading plan
Many of the world’s major currency pairs are traded in the forex market. The London/European session for instance sees considerable movement among European currency-based pairs such as EUR/USD, USD/CHF, GBP/USD, and USD/JPY.
This is because the session includes some of Europe’s largest financial markets such as Frankfurt, Geneva, Paris, Hamburg, Amsterdam, and others. Popular currencies traded during the Tokyo-Sydney/Asian session include the Australian dollar, New Zealand dollar and the Japanese yen. Major currency pairs involving the US dollar (USD) are most active during the New York/North American session.
Each session behaves in a different way, particularly when an overlap in opening hours occurs. This often results in heightened trading volumes, liquidity, and volatility. To be able to handle the sessions requires a tailored trading plan that integrates your trading goals, risk management strategies, and properly defined trading rules. The plan must also align with your trading style and tolerance for risk to avoid large capital losses.
Adapting to the volatilities of all the sessions
The four trading session exhibit varying levels of volatility on 24/5. The is especially evident during the opening times of major sessions when increased liquidity and trading activity can lead to unanticipated price movements which, if not handled properly, can result in a massive loss of funds.
In addition, sessions with lower levels of liquidity may also increase the potential for slippage or unexpected price gaps. An effective risk management strategy that includes measures like stop-loss and take-profit orders should help you manage these volatilities to mitigate adverse trading outcomes.
Leveraging technologies to manage the trading sessions
New technologies today are transforming the trading experience, providing almost everything that traders need to trade forex successfully. Automated or algorithmic trading has become increasingly popular, particularly as a means to manage the forex market trading sessions. MetaTrader 4 (MT4), the world’s most popular trading platform, is renowned for its robust automated trading capabilities.
The feature enables traders to develop Expert Advisors (EAs), also known as trading robots, and technical indicators of any complexity. In this way, traders can stay better informed about market movements, quickly identify trading opportunities, and execute trades even when not actively engaged in the market.
More on MetaTrader 4
The MetaTrader 4 (MT4) trading platform is considered one of the best currency trading platforms by traders worldwide. MT4 is used to trade a range of financial instruments across multiple asset classes.
MetaTrader 4 is popular for a variety of different reasons, including ease of use, powerful features, and its ability to be customised to the needs and trading styles of all traders, regardless of expertise. The platform can be used on the go through a mobile app and via the web on any browser or operating system.
MetaTrader 4 offers key trading features to forex brokers everywhere. This includes:
- a powerful trading system that can implement complex trading strategies,
- advanced analytical functions, trading signals, charts, etc.
- algorithmic trading
- access to the MetaTrader market which offers an extensive range of of trading applications, 1700+ Expert Advisors (trading robots), 2100+ technical indicators, and more.
Widening your scope of knowledge
Irrespective of your trading skills or years of trading, engaging in continuous learning is key to managing market sessions. Learning everything you can about how to trade will help you handle the challenges that come with navigating the different sessions.
Leading broker T4Trade offers its traders the opportunity to boost their expertise through access to the innovative T4Trade Academy which delivers insightful podcasts, webinars, seminars, videos-on-demand, and LiveTV. Traders can also acquire additional information through T4Trade’s blog page which is comprised of numerous articles covering a variety of popular forex trading topics.
Maintaining a trading journal
Keeping a record of all your trades can be very useful, as it gives you the ability to analyse your trading performance over time. Through the insights you acquire, you will be able to identify the strength and weaknesses of your trades and then adapt your trading strategy accordingly. You will also be in a better position to refine your approach to entering and exiting trades, as well as make better trading decisions during different market sessions.
Practice trading in a simulated trading environment
Learning how to trade the forex market takes time and practice. One way to improve your skills and further your trading education is by opening a demo trading account with which to practice trading in a simulated trading environment. Rather than putting your own money at risk, you can use virtual funds to execute trades and assess your trading outcomes.
Opening a demo account with T4Trade will give you access to the MetaTrader 4 trading platform which provides an arsenal of features and tools to help you learn how to become a better trader. Learn how to use technical analysis, analyse charts and monitor trading signals to make optimal trades. Once you’ve built up enough confidence, the transition to a live account should be relatively seamless.
Picking the right forex broker requires extensive research to make an informed choice. T4Trade is quickly gaining popularity for its reliability and expertise in forex trading. The broker offers many cutting-edge trading tools, learning resources and current market insights to make you a more strategic trader. This is in addition to a strong customer care team, flexible leverage, low spreads, fast execution and easy deposits or withdrawals.
Disclaimer: This material is for general informational & educational purposes only and should not be considered investment advice or an investment recommendation. T4Trade is not responsible for any data provided by third parties referenced or hyperlinked, in this communication.