Trading session

Two things share the name. On a listed market a session is defined by the exchange: an opening auction, continuous trading, a closing auction, and in some markets a separate window before or after those hours in which volumes are thinner. On the foreign exchange market, which has no exchange and trades continuously from the Asia Pacific opening to the North American close on Friday, a session is a convention describing when the major centres of a region are at their desks, and the divisions usually named are Sydney, Tokyo, London and New York.

The reason the convention persists is that activity is not spread evenly. Depth concentrates when the centre that normally makes prices in an instrument is open, so a European currency is most actively quoted through the London hours and the overlap with New York is conventionally the busiest window of the day. Volatility, quoted spreads and the size resting at each price all follow the same pattern, and scheduled economic releases are timed to the working hours of the economy that publishes them.

Two traps sit in the clock. Session boundaries and platform server times move with daylight saving, and the regions do not change on the same dates, so the overlap shifts by an hour for several weeks each year and a level defined by a session boundary moves with it. And a market being open is not the same as a market being liquid: the hours around the daily changeover between centres are open for business and frequently thin, which is where the widest quoted spreads of an ordinary day are typically found.