The global foreign exchange (Forex) market operates 24 hours a day, five days a week, making it the largest and most liquid financial market worldwide, with daily trading volumes exceeding $6 trillion. For traders aiming to capitalize on market volatility and high liquidity, timing trades around the four major overlapping trading sessions—Sydney, Tokyo, London, and New York—is critical. Each session reflects unique characteristics influenced by regional economic events and participant activity, resulting in distinct levels of market momentum.

The Sydney and Tokyo sessions anchor the Asian Forex market. The Sydney session, running from 8:00 AM to 5:00 PM local time during winter (7:00 AM to 4:00 PM in summer), kicks off the global trading day. It primarily focuses on the Australian dollar (AUD), New Zealand dollar (NZD), and U.S. dollar (USD). With other major markets closed during this window, price movements tend to be subdued, and liquidity remains relatively thin.

The Tokyo session follows, operating from 8:00 AM to 4:00 PM local time year-round. As Asia’s largest Forex hub, trading activity is more concentrated, with a heavy focus on JPY/USD and JPY/EUR pairs. Japan’s export-driven economy makes this session sensitive to trade data, economic indicators, and corporate flows. For instance, significant swings in JPY crosses often occur during major trade balance or GDP releases. While liquidity here can be thinner compared to European or U.S. hours, intraday traders skilled at identifying short-term catalysts may still find breakout opportunities, particularly around macroeconomic announcements.

As a pivotal component of the European financial landscape, the Frankfurt FX market operates during two seasonal windows: 15:00-22:00 CET (Central European Time) under daylight saving time and 16:00-23:00 CET during standard time. This strategic timing positions it as the primary liquidity source for EUR cross pairs during the European morning session, serving as the continent's institutional trading nexus.

The London foreign exchange market is the "heart" of global foreign exchange trading. Its trading hours are from 4:30 p.m. to 11:30 p.m. local time during daylight saving time or from 5:30 p.m. to 0:30 a.m. the next day in wintertime. London offers a wide variety of traded currencies, with more than thirty types. The largest trading volume is in the GBP/USD pair, followed by GBP/EUR, GBP/CHF, GBP/JPY, etc. The London session is one of the periods with the largest global foreign exchange trading volume, accounting for about 30% of the total. Almost all international large-scale banks have branches here. The trading hours of the London market are closely connected to those of the New York foreign exchange market. From 9:00 p.m. to 1:00 a.m. every day, the major currency pairs are the most volatile, presenting investors with abundant trading opportunities.

The New York Forex market operates from 8:00 PM to 3:00 AM the following day during summertime, and from 9:00 PM to 4:00 AM in wintertime, local time. As one of the world’s leading Forex markets, New York ranks second in daily trading volume, only behind London. It functions as the international settlement center for global USD transactions, with over 90% of USD trades ultimately cleared through its interbank settlement system. In addition to the USD, the New York market also trades major currencies such as the EUR, GBP, CHF, CAD, and JPY.

Economic data from the United States has a significant impact on the New York Forex market, as well as the global Forex market. For example, the release of key economic indicators like non-farm payrolls and GDP figures in the US can lead to drastic increases in market volatility. This volatility can present trading opportunities for investors, but it also comes with higher risks.

Upon examining the major Forex markets, it becomes clear that they are interconnected and not isolated, especially during specific trading hours. They act as confluences of various markets and represent pivotal points in Forex trading.

The overlapping session between Asian and European markets generally occurs between 15:00 and 16:00 Beijing time, marking the convergence of Tokyo's late trading hours and London's early trading session. During this period, market liquidity assumes a unique state. From an Asian perspective, Tokyo's market is winding down, with activity gradually declining, while London's market is just commencing, with traders entering progressively the fray.

Since traders from both markets are not fully active, overall trading volume during this time is relatively low, thus liquidity is less abundant than during the overlap between European and American markets. However, this does not imply a lack of trading opportunities. When significant economic data is released in the Asia-Pacific region, such as Japan's core CPI figures or China's import-export data, the market swiftly reacts, potentially leading to substantial exchange rate fluctuations. For instance, if Japan's economic data outperforms expectations, the yen may appreciate, causing the USD/JPY exchange rate to decline, thereby presenting trading opportunities for investors. For intraday traders, this session is a prelude to observing market trends and preparing for subsequent trading strategies.

The overlapping session between European and American markets constitutes the core trading period in the Forex market, spanning approximately from 20:00 to 24:00 Beijing time. During this time, London's market is in its mid-to-late trading hours, while New York's market is in its early stages. This period is marked by high market activity.

From a liquidity standpoint, financial institutions, banks, and funds from the two major financial hubs actively participate in trading, with substantial capital inflows, ensuring abundant liquidity. Trading volume during this session accounts for a significant proportion of daily trading, with orders executed promptly and bid-ask spreads narrow, providing investors with ideal trading conditions.

This trading session is highly volatile. Key US and European economic data, like US non-farm payrolls, Fed rate decisions, and ECB policy minutes, are often released now. These strongly impact the market, causing sharp swings.

For instance, if US non-farm payrolls top expectations, the USD usually rises, making EUR/USD and GBP/USD fall. Investors who spot these data-driven changes can profit big.

Also, late-session European news can sway the market. If a trend starts in European hours, New York traders often follow, boosting the trend and offering more trading chances.