Trading 24/5 doesn't mean trading ALL hours. The market is open Sunday 5 PM to Friday 5 PM EST, but 70% of daily volume occurs in just 4 hours: the London/New York overlap (8 AM - 12 PM EST). Session timing isn't a detail—it's the difference between grinding and profiting.
Welcome to Lesson 5
You've mastered Market Structure and Liquidity Providers. But here's what separates amateurs from professionals:
WHEN you trade matters as much as WHAT you trade.
The Professional Difference: Retail traders see "24/5 trading" as freedom to trade anytime. Professionals see it as "4 hours of opportunity + 116 hours of noise." They know London/NY overlap (8 AM - 12 PM EST) = 70% of volume. They trade ONLY when major institutional participants are active. Session timing is the ultimate edge multiplier.
Lesson Chapters
1Chapter 1: The 24/5 Trading Cycle⏱️ ~2 min
The Forex market's non-stop operation results from its Over-The-Counter (OTC) decentralized structure. As Earth rotates, major financial centers open and close, passing the "liquidity baton" globally.
The Weekly Trading Cycle
Market Opens:
- Sunday 5:00 PM EST: Sydney/Wellington session begins
- Week officially starts (Monday morning in Australia)
Market Closes:
- Friday 5:00 PM EST: New York session ends
- Weekend begins (48-hour market closure)
The 24-Hour Flow:
Sunday 5 PM EST: Sydney opens (week begins)
↓ 2 hours later
Sunday 7 PM EST: Tokyo opens (Asian session)
↓ 8 hours later
Monday 3 AM EST: London opens (European session)
↓ 5 hours later
Monday 8 AM EST: New York opens (overlap begins)
↓ 9 hours later
Monday 5 PM EST: Cycle repeats
The Concept of Liquidity Flow
Liquidity = Number of Active Participants × Trading Volume
High Liquidity (London/NY Overlap):
- European banks: Active
- US banks: Active
- Hedge funds: Active (both regions)
- Result: Massive volume, tight spreads, instant execution
Low Liquidity (Asian Session):
- Only Asian banks active
- European/US banks: Closed
- Result: Lower volume, wide spreads, potential slippage
2Chapter 2: The Four Major Sessions⏱️ ~4 min
The global market divides into four main sessions, each with distinct characteristics.
Sydney (Pacific) Session 🌏
Active Hours: 5:00 PM - 2:00 AM EST
Characteristics:
- Lowest volume (~5% of daily global volume)
- Lowest volatility (20-30 pip range)
- Consolidation period
Best Pairs: AUD/USD, NZD/USD
Strategy: Range trading
Tokyo (Asian) Session 🗾
Active Hours: 7:00 PM - 4:00 AM EST
Characteristics:
- Moderate volume (~20% of daily volume)
- Range-bound bias
- Respects technical levels
Best Pairs: USD/JPY, EUR/JPY, GBP/JPY
Strategy: Range trading, mean reversion
London (European) Session 🇬🇧
Active Hours: 3:00 AM - 12:00 PM EST
Characteristics:
- HIGHEST volume (~38% of daily volume)
- Highest liquidity (London = Forex capital)
- Trend establishment
Best Pairs: EUR/USD, GBP/USD, EUR/GBP
Key Events:
- 3:00 AM: London open (volatility spike)
- 4:00-5:00 AM: European data releases
- 7:30 AM: ECB/BoE announcements
Strategy: Breakout trading, trend following
New York (North American) Session 🗽
Active Hours: 8:00 AM - 5:00 PM EST
Characteristics:
- High volume (~22% of daily volume)
- News-driven (US economic data)
- Two phases: Morning (high), Afternoon (declining)
Best Pairs: All USD pairs, USD/CAD
Key Events:
- 8:30 AM: US data (NFP, CPI, GDP)
- 2:00 PM: Fed announcements
Strategy: News trading, trend continuation
Session Comparison Table
| Session | Volume % | Volatility | Spread (EUR/USD) | Best For |
|---|---|---|---|---|
| Sydney | 5% | Very Low | 3+ pips | AUD/NZD pairs |
| Tokyo | 20% | Low-Moderate | 2-3 pips | Range trading |
| London | 38% | High | 0.6-1.0 pips | Breakouts, trends |
| New York | 22% | High (AM) | 0.8-1.5 pips | News trading |
| Overlap | 70% | Extreme | 0.5-0.8 pips | All strategies |
3Chapter 3: The Session Overlaps⏱️ ~4 min
The most profitable periods occur during session overlaps—when two major financial centers trade simultaneously.
A. London/New York Overlap (The Golden Window) 🥇
Time: 8:00 AM - 12:00 PM EST (4 hours)
Why It's THE Most Important:
1. Highest Combined Volume:
- London: 38% of daily volume
- New York: 22% of daily volume
- Overlap captures: ~70% of total daily volume
2. Tightest Spreads:
- EUR/USD: 0.5-0.6 pips (lowest of entire day)
- GBP/USD: 0.8-1.0 pips
- Cost savings: 50-70% vs. Asian session
3. Institutional Activity:
- European banks executing orders
- US banks opening positions
- Hedge funds active (both continents)
- Result: Real price discovery, tradable trends
4. Major News Releases:
- 8:30 AM: US employment (NFP), inflation (CPI), GDP
- 10:00 AM: Consumer confidence, housing
- News impact: 100-300 pip moves possible
Best Pairs:
- EUR/USD (most liquid, tightest spread)
- GBP/USD (high volatility, clean moves)
- USD/JPY (strong directional bias)
Strategy:
- ✅ Scalping (tightest spreads enable 5-10 pip targets)
- ✅ Day trading (ride 30-50 pip moves)
- ✅ Breakout trading (London high/low breaks)
- ✅ News trading (8:30 AM releases)
Professional Rule: If you can only trade 4 hours per day, make it THIS window.
B. Tokyo/London Overlap
Time: 3:00 AM - 4:00 AM EST (1 hour)
Characteristics:
- European traders entering as Tokyo exits
- Liquidity increase from Asian lows
- Direction often shifts
Best Pairs: GBP/JPY, EUR/JPY, EUR/GBP
Strategy: Fade Asian range extremes, watch for breakout confirmation
Times to AVOID
1. Sunday Opening (5:00-7:00 PM EST):
- Weekend gaps (price jumps from Friday close)
- Extremely wide spreads (5-10 pips)
- Rule: Never hold positions through weekend
2. Friday Late Afternoon (3:00-5:00 PM EST):
- Liquidity drain (institutions closing)
- Wider spreads (2-3x normal)
- Rule: No new positions after 3 PM Friday
3. Major Holidays:
- Banks closed (50-70% volume missing)
- Spreads 3-5x normal
- Rule: Check calendar, avoid trading
4. Asian Session (For Non-Asian Pairs):
- Wide spreads (2-3 pips vs. 0.6 pips overlap)
- Choppy price action
- Exception: If trading USD/JPY, AUD/USD
Professional Time Management: Trade 4-6 hours daily MAX, focused on London/NY overlap. This isn't part-time trading—it's PROFESSIONAL trading. Better win rate (optimal conditions), lower costs (tight spreads), higher profitability (quality over quantity). If you can't trade during overlap (work schedule), swing trade instead (session timing less critical for multi-day holds).
4Chapter 4: Summary, FAQs & Quiz⏱️ ~5 min
Summary
Key Principles (0/5)
Frequently Asked Questions
Q1: What is a "weekend gap" and how do I manage it?
Weekend Gap = Price jumps between Friday close and Sunday open (48-hour market closure allows news to move price)
How to Manage:
Option 1: Close All Positions (Safest)
- Close by Friday 3 PM EST
- Zero weekend exposure
- Professional standard
Option 2: Use Guaranteed Stop Loss (GSL)
- Some brokers offer GSL (fills at exact stop, even if gapped)
- Cost: Wider stop distance required
Professional Rule: Never risk more than 1-2% on weekend holds. Most pros close everything Friday.
Q2: Why are spreads usually wider during the Asian session?
Spreads widen during Asian session due to LOW LIQUIDITY.
Asian Session Reality:
Liquidity Providers Active:
- Asian banks: 5-10 (vs. 20-30 during London)
- European banks: 0 (closed)
- US banks: 0 (closed)
Result:
- Less competition = wider spreads
- EUR/USD: 2.5 pips vs. 0.6 pips during overlap
Quiz
The 'Golden Window' of peak liquidity and volatility occurs during which session overlap?
Which characteristic is MOST associated with the Asian trading session?
If you are a scalper seeking the tightest possible spread, which session should you prioritize?
Why is trading often ill-advised during the final hour before the market closes on Friday?
What percentage of total daily Forex volume occurs during the London/New York overlap?
Call to Action
You now possess strategic knowledge of market timing—the difference between grinding and profiting.
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Proceed to Lesson 6: Why People Trade Forex (Hedging, Speculation, Arbitrage)
Prerequisites
Before studying this lesson, ensure you've completed:
Ready to master session timing? Understanding when to trade is just as important as knowing what to trade.
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