WOne of the most active times to trade forex is during the New York session. The busiest time of the day is when the US and London forex market sessions happen simultaneously.
What time does the forex session in New York start?
The forex session in New York starts at 8:00 AM ET and ends at 5:00 PM ET. When the US Forex session and the London Forex market session happen simultaneously, this is called an “overlap.” The London Forex market session starts at 3:00 AM ET and ends at midnight ET, so the overlap happens between 8:00 AM ET and midnight ET.
During this overlap, trading in the US could be much like trading in the London session.
Time on the Forex market The US session and the London session happen at the same time.
Most of the time, the start of the New York forex session is more volatile than the rest of the day. Traders can trade with different levels of volatility in different ways.
New York Breaking Out Strategy: Trading the “Overlap”
The “overlap” occurs when the London and US forex sessions happen simultaneously. When the two markets overlap during these four hours, much money comes into the market at once, making big moves happen quickly.
The image below shows how average hourly moves in the EUR/USD are at their highest when the two biggest markets overlap (where the green lines meet).
Average hourly changes in EUR/USD by an hour of the day. US Forex market session
Traders can use a breakout strategy to take advantage of the increased volatility during the overlap.
The EUR/USD is used to show an example of the New York breakout strategy:
The EUR/USD formed a triangle pattern, which the price broke out of during the overlap. Once a trader has taken care of risk management correctly, they can use any relevant support and resistance mechanism to stage their entry into a trade.
EUR/USD New York Breakout Strategy Trading In the Late Part of The New York Session
As soon as London closes for the day, volatility tends to drop significantly. From the same chart we looked at above, which showed the average hourly moves in EUR/USD by an hour of the day, we can see that the moderate hourly activities during the last part of the US forex trading session have a very different tone:
Average hourly moves in EUR/USD by an hour of the day
As you can see, the market is less volatile in the later part of the New York session. Since the average hourly moves are smaller in the last parts of the New York session, traders could use a different trading strategy, such as a range trading strategy.
Traders using a range trading strategy take advantage of support and resistance levels. A range trading strategy is shown in the chart below. When the price exceeds the upper limit (the red line), traders will look for ways to sell the short currency pair. When the price goes below the lower bound (the green line), traders will try to buy the currency pair.
A range trading strategy is based on the idea that as volatility goes down. The support and resistance levels may be harder to break and, as a result, are more likely to hold, which is good for the range trading strategy.
Strategy for trading in a range
Best Foreign Exchange Pairs to Trade in the New York Session
During the New York forex trading session, the best currency pairs to trade are the majors, such as EUR/USD, USD/JPY, GBP/USD, EUR/JPY, GBP/JPY, and USD/CHF. During the US session, these pairs, especially the EUR/USD pair during the overlap, will have the most trades.
Each session of forex trading is different. The London session comes after the New York session, followed by the Asia trading session.
Because of the liquidity, spreads will narrow, lowering trading costs. During the overlap, most forex traders will benefit from the fact that there will be both more volatility and more liquidity.
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