FOREX

Asian trading session or Tokyo session

When liquidity is restored to the Forex market after the weekend, the Asian markets are naturally the first to observe action. In other words, Forex market trading hours start there. Activity (although not officially) from this part of the world is actually represented by the Tokyo capital markets, which are live between 00:00 - 06:00 GMT. Nonetheless, there are a lot of other countries with considerable pull that are present during this period, including Australia, China, New Zealand, and Russia.

Taking into account how those scattered markets are, it makes sense that the start and end of the Asian session is stretched beyond the standard Tokyo market hours for Forex. In fact, to allow for these different markets' activities, Asian hours are frequently considered to run between 23:00 - 08:00 GMT.

European trading session or London session

Later in the trading day, just prior to the Asian trading hours coming to a close, the European session takes over in keeping the currency market active. This Forex trading time zone is very dense, and involves a number of key financial markets. London takes the honor of identifying the parameters for the European session.

Official business hours in London run between 07:30 - 15:30 GMT. This trading period is enlarged owing to other capital markets' presence (including France and Germany) prior to the official open in the UK, whilst the end of the trading session is pushed back as volatility holds until London closes. Therefore, the European Forex trading hours GMT are commonly observed as running between 07:00 - 16:00 GMT.

North American trading session or New York session

When the North American session comes online, the Asian markets have already been closed for a couple of hours, but the day is only halfway through for European FX traders. The Western session is influenced by activity in the US, with a few contributions from Canada, Mexico, and other countries in South America. Not surprisingly, activity in New York marks the high in volatility, as well as participation for the session in North American Forex market hours GMT.

Considering the early activity in financial futures, commodity trading, and the visible concentration of economic releases, the North American hours non-officially starts at 12:00 GMT. With a substantial gap between the close of the US markets, and the Asian Forex market opening hours, an interval in liquidity establishes at the close of the New York exchange trading at 20:00 GMT, because the North American session comes to a close.

What is the Spread in Forex?

The Forex spread is called the difference between the buy price and the selling price of a currency.

What is a Forex Pip?

The Forex pip is the smallest price movement that the price can make.

Here is an example to fully-understand how the pip value is calculated.

The base currency’s pip value = (0.0001 / exchange rate) * Contract size

The best example in that context is USD/CAD = 1.2740, where the Pip value = 100,000 USD * (0.00001 / 1.2740) = $7.84.

What is a Lot?

Forex is traded through what is known as lots. In fact, the trader can determine the number of contracts he would like to trade, according to the size of his portfolio and his risk-tolerance.

How to Calculate Forex Leverage?

If the available leverage is 50:1, then this implies that every dollar in the trader’s account can purchase $50. The trader only needs to set as side a portion of, in this case, one dollar, and the broker lends the reminding $299 to its client. Once the deal is closed, the client refunds the $299 to the broker. All of this is automatically managed by the trading platform.