Characteristics of the 3 Major Trading Sessions: Asia, Europe & USA Market Sessions
Asian Market Session
During the Asian market session only 8 % of total daily financial transactions go through Tokyo desks. This is the least active of the three major trading sessions. Most of this 8% only involves yen based currency pairs with very little transactions happening for other financial instruments such as GOLD. This is the reason why it is not suitable to trade Gold metal during this period. Not trading this period will save you a lot of time and money.
European Market Session
The London/European market session takes the majority share of the total financial transactions, 34% of all financial transactions are carried out during this European session. London time zone is also well placed in terms of business hours for both eastern and western economies, this is when there are market session overlaps and this results in high number of financial transactions during the this period. This time is most liquid and most volatile session for all the currency pairs as well as Gold metal.
The Europe time zone also includes the euro zone member countries. The Euro zone has 17 members and major banks of these countries are open and there is a lot of liquidity as many financial transactions are being executed.
USA Market Session
The USA market session takes up 20% of all financial transactions. The most active time for trading is approximately from 8 am to 12 pm GMT when both London and New York dealing desks are open. This is when there is generally the highest volatility as it is also when the majority of the major US economic announcements are released.
European and USA Market Sessions Overlap
Although the online exchange trading market is open 24 hours a day during the week, there are periods which have a greater volume of trade transactions, thereby increasing the opportunities to make a profit.
For day traders trading Gold metal online the most productive hours are the London and the USA market session overlaps and this is the peak for financial transactions - when these two market sessions overlap when there is a large volume of financial transactions and the market is most active.
During this overlap a significant amount of fundamental news is released generating a lot of volatility and the XAUUSD prices move fast and there is plenty of opportunities to trade, this overlap offers the best opportunity for those wanting to maximize profit.
The best hours for trading XAUUSD, are during this overlap because the Gold prices really move and the moves are decisive and offer the best chance to make profits.
This is also why Asian traders, like the Japanese will wait until afternoon to start executing their trading orders; this is the period that will coincide with the Europe and USA sessions.
Asian investors will not open trade transactions during the Asian time, therefore as an investor from anywhere in the world it is best stay away also, after all even the hedge funds and other pro investors from Asia will avoid this time and wait until afternoon to trade when it is much easier because of the liquidity during the USA and UK session overlaps.
Therefore to come up with the best hours based on these three sessions is shown below:
Market Session Hours and Market Sessions Overlaps
The chart above shows the timetable of when each market session starts and when it ends. The chart also shows when there are session overlaps and also shows the best hours to trade Gold and other financial instruments based on these overlaps.
Determine Your Gold Trading Schedule
The type of Gold trader that you are determines your trading schedule. If you don't have a lot of time then a longer term Gold trading 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 trade transactions during the most active market hours. The above chart shows the best GMT times to be in the market - from around 800 GMT and 1800 GMT.
Determine Your Chart Time frame
To set up a trading schedule you need to determine your chart time frame that you will be trading with. Try using different chart time frames until you find the most suitable to use in accordance with your trading schedule.
Test Your Gold Trading Strategy
Test your trading strategy on a practice demo account for a period of two months or more. Keep track of every trade transaction and monitor the progress of your trading schedule. Try to analyze what times are most profitable for your Gold trading strategy.
Your strategy should be specified on the Gold trading plan that you use.
To learn more about how to specify your trading strategy in your trading plan, read the tutorial about writing a Gold trading plan. This tutorial will show you an example of a format that you can use to specify your trading schedule.