The Tokyo and New York sessions are two of the four major trading sessions in the forex market, each offering distinct characteristics and trading opportunities. Here’s a detailed comparison between these two important sessions:

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.
  • banner image

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.

banner image

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.