New York Forex trading session: The American game

Today, New York is the second largest foreign exchange market in the world, and according to studies conducted by organizations such as the Bank for International Settlements, it accounts for about 19% of the world's total foreign exchange trading volume. It is also the financial center that covers the most hours of the Forex trading day, so it overlaps with other sessions, including the European session, for several hours. The American session starts at 15:00 and ends at 23:00 GMT+2.

The highest volume of trading during the American session falls just between 15:00 and 19:00 GMT+2, when European investors continue to open and close positions in the market and liquidity is high. After this period, the pace of trading activity usually drops significantly to a minimum until the market opens in Tokyo (Asian session).

Forex Session

During the US session, currency pairs such as GBP/USD, GBP/JPY, USD/CHF and EUR/JPY are most suitable for intraday traders with a higher risk tolerance, as the daily price fluctuations in these pairs average 120 pips.

When U.S. equity and bond markets open during the U.S. session, foreign investors must convert their local currencies, such as euros, Swiss francs and yen, into dollar assets in order to trade. When the European and American sessions overlap, the aforementioned currency pairs (and the Forex market in general) have wider price ranges as more investors are present in the market and therefore trading volume is higher compared to other periods of the trading day.

Volatility of currency pairs in pips

In most cases, currencies in the Forex market are quoted in US dollars and are traded against the US dollar before moving to other currencies. For example, in the case of the GBP/JPY pair, in order for one pound sterling to be converted into yen, it must first be traded against the dollar and then against the yen. For this reason, a GBP/JPY trade actually involves two trades in different currency pairs, GBP/USD and USD/JPY.

As a result, the volatility of a currency pair such as GBP/JPY is determined by the correlations between the two major currency pairs that are traded to make the final buy/sell trade of that pair. In the case of GBP/JPY, since GBP/USD and USD/JPY have negative correlations (meaning that the two pairs tend to move in opposite directions), the volatility of the pair is amplified, as evidenced by the wide trading range of this pair almost every day. Price movements in other pairs such as USD/CHF can also be explained in similar terms, albeit with a different intensity.

Profitability of trading during the American session

Forex trading during the American session can be highly profitable, but it is important for traders to realize that it can be quite risky as the market tends to move strongly during this period. As a result, traders must constantly analyze and revise their trading strategies to adapt to changing market conditions and sudden price movements that can cancel long-term strategies (e.g., stop-loss execution or converting winning positions into losing positions) or even easily stop executing orders (in some cases, orders are not executed at the trader's desired price) due to price slippage and other similar situations that can occur when volatility is very high (e.g., when the market is very volatile).

For traders wishing to minimize risk, currency pairs such as EUR/USD, USD/CAD and USD/JPY are most suitable during the American session because they are less volatile, offering traders the opportunity to make attractive profits with less risk. The high liquidity of these pairs allows investors to make profits or limit losses quickly and efficiently. At the same time, their relatively modest volatility provides a safer trading environment for traders looking to implement long-term trading strategies.