Time Frame
Tokyo Session:
- Starts: 12:00 AM GMT
- Ends: 9:00 AM GMT
New York Session:
- Starts: 8:00 AM EST (1:00 PM GMT)
- Ends: 5:00 PM EST (10:00 PM GMT)
Volatility and Liquidity
Tokyo Session:
- Generally experiences lower volatility compared to the New York session.
- Liquidity is lower but picks up during the overlap with the Sydney session and peaks when Tokyo overlaps with London for the first hour.
- The quieter market can be conducive to range trading strategies.
New York Session:
- Known for high volatility, especially in the first few hours when it overlaps with the London session (1:00 PM to 5:00 PM GMT).
- Liquidity is highest during this overlap period and remains substantial throughout the session.
- Major market-moving economic data from the US can lead to significant price swings.
Market Influence
Tokyo Session:
- Influenced by economic news and data releases from Japan and other Asian countries.
- Significant announcements from the Bank of Japan (BOJ) or major Japanese corporations can impact the session.
- Major trading activity in JPY pairs like USD/JPY, EUR/JPY, and AUD/JPY.
New York Session:
- Dominated by US economic news, including key indicators like Non-Farm Payrolls, GDP, inflation data, and Federal Reserve announcements.
- Also influenced by news from Canada and Latin America.
- Major trading activity in USD pairs like EUR/USD, GBP/USD, USD/JPY, and USD/CHF.
Trading Strategies
Tokyo Session:
- Range Trading: Due to lower volatility, traders often employ range trading strategies, identifying support and resistance levels.
- News Trading: Reacting to economic data releases from Japan and other Asian countries.
- Carry Trades: Popular in lower volatility environments, particularly involving the Japanese Yen.
New York Session:
- Breakout Trading: The higher volatility makes breakout strategies effective, particularly during the overlap with the London session.
- Trend Following: Trends established during the London session often continue into the New York session.
- News Trading: High impact from US economic data releases, leading to significant price movements.
Active Currency Pairs
Tokyo Session:
- JPY pairs are most active, such as USD/JPY, EUR/JPY, and AUD/JPY.
- Also sees activity in AUD and NZD pairs due to geographical proximity and time zone overlap with the Sydney session.
New York Session:
- USD pairs dominate, including EUR/USD, GBP/USD, USD/JPY, and USD/CHF.
- Also sees significant activity in commodities and indices, affecting related currency pairs.
Overlaps with Other Sessions
Tokyo Session:
- Overlaps with the Sydney session in the early hours, adding liquidity.
- Briefly overlaps with the London session for the first hour, which can see increased volatility and trading opportunities.
New York Session:
- Overlaps with the London session from 1:00 PM to 5:00 PM GMT, which is the most liquid and volatile period in the forex market.
- This overlap period provides ample trading opportunities and is often where the most significant price movements occur.
Comparison Summary
- Volatility: New York > Tokyo
- Liquidity: New York > Tokyo
- Market Influence: New York is driven by US economic data; Tokyo by Japanese and Asian data.
- Trading Strategies: Range trading is more common in Tokyo; breakout and trend following are prevalent in New York.
- Active Pairs: JPY pairs in Tokyo; USD pairs in New York.
- Overlaps: Tokyo overlaps with Sydney and briefly with London; New York overlaps with London.
Understanding these differences helps traders tailor their strategies to the specific conditions of each session, maximizing their trading opportunities.
