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Forex trades 24 hours a day because it moves through three overlapping sessions: Asian (centered on Tokyo), London, and New York. Each session tends to favor different currency pairs based on which region's banks and institutions are active.
The London session is generally the most active for EUR and GBP pairs, while the New York session drives a lot of USD-related volume. The overlap between London and New York is often the most volatile window of the day.
The Asian session, by contrast, tends to be quieter and more range-bound, which suits different strategies than the sharper breakouts more common during the London/New York overlap. Knowing which session you're trading in helps set realistic expectations for how much a pair is likely to move.
Real-World Example
A trader based in the US wants to trade GBP/USD and notices something puzzling: at 3am their time, during the quiet late-Asian session, the pair barely moves for hours; but the moment London opens, volume and range explode, and it gets even more active a few hours later when New York opens too, overlapping with London for several hours before London closes. That London-New York overlap window is when this trader gets the tightest spreads and cleanest breakouts on GBP/USD — trading the exact same currency pair at 3am versus during the overlap can feel like trading two completely different instruments.
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