London New York Overlap Forex
The New York forex session is one of the well-nigh liquid forex trading sessions. When the The states session overlaps with the London forex market session it is considered to be the most liquid menses of the day.
What fourth dimension does the New York Forex Session Open?
The New York forex session opens at 8:00 AM ET and closes at 5:00 PM ET. The 'overlap' occurs when the US Forex session overlaps with the London forex market session. The London Forex marketplace session opens at iii:00 AM ET and closes at 12:00 PM ET, so the overlap occurs betwixt 8:00 AM ET and 12:00 PM ET.
During this overlap, the US session could trade very much like the London session.
The beginning of the New York session is normally more volatile than later in the day. There are unlike methods traders can use to trade differing levels of volatility.
New York Breakout Strategy: Trading the 'Overlap'
The 'overlap' is when the London and United states forex sessions literally overlap each other. These are the two largest marketplace centers in the world, and during this four-hour menstruation – big and fast moves tin can be seen during the overlap equally a large amount of liquidity enters the market.
The prototype below shows how during the overlap (between the green lines) of the two biggest markets, average hourly moves in the EUR/USD accomplish highs.
To merchandise the overlap, traders can use a break-out strategy which takes reward of the increased volatility seen during the overlap.
An example of the New York breakout strategy, using the EUR/USD, is shown below:
The EUR/USD formed a triangle-pattern which, during the overlap, the price of the EUR/USD broke out of. Once a trader has properly addressed risk management, the entry into the merchandise can exist staged with any relevant mechanism of support and/or resistance.
Trading the later part of the New York session
As London closes for the 24-hour interval, volatility will have a tendency to decrease drastically. From the same chart we looked at above, that showed the average hourly moves by hour of day in EUR/USD, nosotros can see a markedly different tone in the average hourly move for the afterwards portion of the US forex trading session:
Equally you lot can see, the later part of the New York session displays less volatility. Since the average hourly moves are smaller in the later stages of the New York session traders could use a different trading strategy, like a range trading strategy.
Using a range trading strategy trader take advantage of support and resistance levels. The chart below shows an example of a range trading strategy. When the price moves the upper bound (blood-red line) traders will wait to short the currency pair. When the cost moves the lower leap (the greenish line) traders will look to purchase the currency pair.
The logic behind using a range trading strategy is that as the volatility lowers, the levels of support and resistance may be harder to break and volition therefore more probable concord- benefiting the range bound trading strategy.
All-time FX pairs to trade during the New York session
The all-time forex pairs to trade during the New York session would be your majors, like EUR/USD, USD/JPY, GBP/USD, EUR/JPY, GBP/JPY, and USD/CHF. These pairs volition be the most liquid during the U.s.a. session, especially the EUR/USD during the overlap.
Each forex trading session has unique characteristics, the London forex trading session follows the New York session which is then followed by the Asia trading session.
The liquidity volition lead to reduced spreads and therefore, lower trading costs. During the overlap, the combination of increased volatility and increased liquidity will be benign to most forex traders.
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Source: https://www.dailyfx.com/education/why-trade-forex/trading-the-new-york-session.html
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