How to trade forex with a session map?

Experienced stock traders often attempt to apply their proven systems to forex trading. They often suffer the same setbacks as aspiring forex traders when they do. Why is it? What makes the forex market so different from stocks, bonds or indices?

One of the main differences is that the forex market trades continuously, 24 hours a day, five days a week. This continuous action (but fluctuating in intensity) forces new participants to adjust their trading style. Strategies that have worked in other markets need to be modified to approach FX successfully.

It’s all relative to the time of day you trade in the forex markets. Transactions made when traders from Tokyo are active can be very different from transactions made when traders from London or New York are active. So how can traders break the 24-hour cycle without the hours imposed by the exchange?

Enter session cards.

Trade different currency centers

A smart way to handle the 24-hour action in forex is to break down each day into three main “sessions” that occur each trading day.

  1. The Asia/Pacific session:
    Most of the turnover in this time zone is done in Sydney, Tokyo, Hong Kong and Singapore. Typically, exporters and regional central banks will be active during this session. However, the liquidity is nowhere near as deep as in the London or New York sessions. As such, the price action is usually not as interesting as in other sessions.
    The Asia session has its moments: when there is regional data (AUD or NZ unemployment, JPN Tankan, Central Bank meetings), you can count on strong directional moves. But most of the time this session is limited or follows whatever happened in the New York session.
  2. The London session:
    This is perhaps the most important session of the day, for geographical reasons above all. Besides London, other European financial centers like Frankfurt, Geneva and Paris are active. This is why significant corporate activity takes place during this session and contributes to the deep liquidity of the session. This deep liquidity means that the price action seen in the London session is quite substantial. This gives a good insight into market sentiment and positioning.
  3. The New York session:
    The foreign exchange market is experiencing its peak in turnover as London passes the baton to New York. However, while the London session tends to be trendy, New York can have a lot more volatility and chop. In the afternoon in New York, liquidity begins to dry up quickly.

How to trade forex with a session map?

Figure 1. EURUSD 1H with Session NY, London, Asian indicator

Obviously, the best trading strategies to deploy can change significantly depending on when you are trading.

The main purpose of a session chart is to help traders visualize which session is currently operational.

The session chart allows traders to more effectively spot the strengths and weaknesses of a session. They also help you notice patterns which can be helpful in identifying market sentiment.
• Are all the majors going in the same direction? Maybe the US dollar is pulling everything in the same direction, or maybe risk appetite is pushing high-yielding currencies up (or down).
• Is the USD dynamic, with EUR/USD, GBP/USD, AUD/USD and NZD/USD in one direction and USD/CAD and USD/CHF in the other ?
• Is it a commodity dollar day, with big moves in AUD/USD and USD/CAD?

The session card can help you establish these factors more easily. Indicators for session charts are numerous and can be found on all major trading platforms. The session chart visualized above is one of the most popular indicators used by traders on TradingView. In this indicator, each color represents a different session (Asian = purple, London = green, New York = red). The overlap between the London and New York sessions creates a brown band.

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