Characteristics of The 3 Major Sessions: Asia, Europe & USA

Asian Session

During the Asian market only 8 % of total daily transactions go through Tokyo desks. This is the least active of the 3 major sessions. Most of this 8% only involves yen based commodity instruments with very little transactions happening for other commodity instruments. This is the reason why it's not suitable to trade during this time period. Not trading this period will save you lots of time and money.

European Session

The London/European market takes the lion's share of the total transactions, 34% of all transactions are carried out during this session. London time-zone is also well placed in terms of business trading hours for both eastern & western economies, this is when there are market overlaps and this results in high number of transactions during the this period. This time is most liquid and most volatile session for all the commodity instruments.

The Europe time zone also includes the EUR zone member countries. EUR zone has 17 members and major banks of these countries are open and there is a lot of liquidity as many transactions are being executed.

US Session

The US market takes up 20% of all transactions. Most active time for trading is approximately from 8 am to 12 pm when both London & New York dealing desks are open. This is the market time when there is the highest market volatility as it is also the market time when the majority of the major US economic data announcements are announced.

European US Session Overlap

There are periods which have a greater volume of trade transactions, therefore increasing opportunities to make a profit.

For day traders the most productive hours are the London and the US session overlaps and this is the peak for trades is when these two overlap when there is a large volume of transactions and the commodity market is most active.

During this overlap a substantial amount of economic news reports is released generating a lot of price volatility and the prices move fast and there is a lot of opportunities to trade, this overlap offers the best market opportunity for those wanting to maximize profit.

The best hours for trading, are during this over-lap because the prices really move and the moves are decisive and offer the best chance to make profits

This is also why Asian traders, Japan will wait until afternoon to begin executing their commodity orders, this is the period which will coincide with the European and USA market sessions.

Asian investors will not open commodity transactions during the Asian time, therefore as a trader from anywhere in the world it is best to stay away at this time, after all even the hedge funds and other pro investors from Asia will avoid this time and wait for until afternoon when it is much easier because of the liquidity during the US and UK overlaps.

Therefore to come up with the best hours using based on these 3 markets sessions as displayed below:

Market Hours & Overlaps

The chart above shows the timetable of when each session starts & when it ends. The chart also shows when there are overlaps & also shows the best hours based on these overlaps.

Summary:

Determine Your Schedule

The type of trader you are determines your schedule. If you do not have a lot of time then a longer term strategy would suit you best. If on the other hand you have a lot of time then you might decide to set a day trading schedule where you open commodity transactions during the most active market hours. The above chart shows the best GMT times to be in the commodity market - from around 800 GMT and 1800 GMT.

Determine your timeframe

To set up a schedule you need to determine your chart time frame. Try using different chart time frames until you find the most suitable and comfortable to use in accordance with yourschedule.

Test your commodity strategy

Test your commodity strategy on a practice demo account for a period of two months or more. Keep track of every transaction and monitor the progress of your schedule. Try to analyze what times are most profitable for your trading strategy.

Your trading strategy should be specified on the trading plan that you use.

To learn more about how to specify this in your plan, read the tutorial about Commodity Trading plan. This learn commodity tutorial will show you an example of a format that you can use to specify your schedule.