The forex market operates 24 hours a day and is divided into four major trading sessions: the Sydney session, the Tokyo session, the London session, and the New York session. Each of these sessions has unique characteristics, largely due to the specific financial markets that are open during those times.
The Sydney session, also known as the Asia-Pacific session, is the first trading session to open each day. It sets the tone for the rest of the trading day. The session begins at 10 PM GMT (Greenwich Mean Time) and ends at 7 AM GMT.
- The Sydney session is known for its lower volatility compared to the London and New York sessions. This is partly because the Sydney market is smaller and there’s less financial flow during these hours.
Sydney Session Forex Time in Nigeria
- Opens at 10:00 PM Nigerian time
- Closes at 7:00 AM Nigerian time
- The first 1-2 hours when the session opens sees high volatility. Be ready!
- 2 AM – 4 AM EST is the Sydney/Tokyo overlap. Another volatile trading period.
The Sydney forex market is open from 9:00 pm to 6:00 am UTC. For you in Nigeria, this translates to starting at 10:00 pm and closing at 7:00 am West Africa Time (WAT), considering Nigeria is one hour behind UTC.
This means that while many in Nigeria are winding down for the night, the Sydney session is just getting started. This might seem like an ungodly hour for trading, but it’s a crucial time if you want to benefit from pairs like AUD/USD.
Traders who are comfortable with night trading can benefit significantly from the Sydney session. This is because the session’s active hours fall late at night to early morning in Nigeria. If you’re a night owl and can stay alert during these hours, you could reap substantial profits from the high volatility of the AUD/USD and NZD/USD pairs.
It’s important to note that the Sydney session overlaps with the Tokyo session from 12:00 am to 6:00 am UTC, which is 1:00 am to 7:00 am WAT. This overlap period, especially between 2 am to 4 am EST (which is 7 am to 9 am Nigeria time), is known for increased volatility and liquidity, offering potentially profitable trading opportunities.
- Start of the Week: The Sydney session is the first to open after the weekend, which means it can set the tone for the week. Pay attention to any significant events or changes that occurred over the weekend, as these can influence market sentiment as the new trading week begins.
- Daylight Saving Time: Be aware of daylight saving time changes in Australia, as they can affect the exact trading hours of the Sydney session.
- Session Characteristics: The Sydney session is known for moderate liquidity compared to the London or New York sessions. It offers a more relaxed trading environment, which can be beneficial for detailed market analysis and strategic trade planning
Best Currency Pairs to Trade During the Sydney Session
During the Sydney session, the most actively traded currency pairs include AUD/USD, NZD/USD, and USD/JPY. These pairs are most liquid during this time and can provide good trading opportunities. The AUD/USD pair, in particular, is the most traded during the Sydney session due to its high volatility, performance, and stability.
The main currency pairs that tend to be active during the Sydney trading session include:
- AUD/USD (Australian Dollar / US Dollar)
- NZD/USD (New Zealand Dollar / US Dollar)
- AUD/JPY (Australian Dollar / Japanese Yen)
- NZD/JPY (New Zealand Dollar / Japanese Yen)
AUD/USD
The AUD/USD pair represents the Australian Dollar against the US Dollar. It is the star of the Sydney session, accounting for 47% of the average daily turnover. It’s the most liquid pair during these hours, as it involves the Australian dollar, which is the local currency.
The AUD/USD is loved by many day traders for its high volatility, performance, and stability. However, with high volatility comes higher risk, so it’s crucial to have a solid risk management strategy in place.
The AUD is a commodity currency, meaning its value is largely influenced by the prices of raw materials like precious metals, oil, and agricultural goods. This is because Australia’s economy is heavily dependent on exports, particularly to China, and this relationship plays a significant role in the rise and fall of the AUD.
This pair can show more movement during the Sydney session, especially if there are economic news releases from Australia.
When trading the AUD/USD pair during the Sydney session, consider the following strategies:
- Follow the Trend: The AUD/USD pair often shows smooth long-term trends, making it relatively easy to predict.
- Watch for Economic Releases: Keep an eye on the release of key economic data from both the US and Australia. These releases can cause significant volatility in the AUD/USD pair.
- Monitor Commodity Prices: Given the AUD’s status as a commodity currency, changes in commodity prices can lead to movements in the AUD/USD pair
- According to historical pip movement data, the average daily pip change for AUD/USD is 81 during the Sydney session versus 114 pips during the London session.
USD/JPY
The USD/JPY pair is one of the more popular pairs during the Sydney session, especially during the Sydney/Tokyo overlap from 2 am to 4 am EST. During this overlap, you can expect some increase in volatility and liquidity, but it’s generally not as intense as during the London session.
- This pair is influenced by the economic activities of Japan, which is also active during these hours.
- For the USD/JPY pair, the average daily pip movement during the Sydney session is around 43.
Keep an eye on political events and economic data releases from Japan, as these can significantly impact the pair.
AUD/NZD
The AUD/NZD pair is an interesting one to watch. It involves two closely related economies, and the pair can be quite volatile during the Sydney session. This is because both the Australian and New Zealand markets are open, making it a prime time for trading this cross.
EUR/USD, USD/CHF, and GBP/USD
While not as directly related to the Sydney session, these major pairs still see some action. The EUR/USD, for example, is the most traded forex pair globally and can still offer opportunities during the Sydney session.
Similarly, USD/CHF and GBP/USD are major pairs that can be traded, but keep in mind that their primary movements occur during the London and New York sessions.
Why Sydney Session Matters
There are a few reasons why the Sydney forex trading session is worth paying attention to for Nigerian traders:
- Increased volatility when Sydney opens can lead to trading opportunities
- Overlap with Tokyo session sees high forex trading volumes
- News and data from Australia and New Zealand can influence currency pairs
- Potential to catch early trends that may continue into London/Europe and New York sessions
Tips for Trading Sydney Session
Trading during the Sydney session requires an understanding of its unique characteristics, including the best currency pairs to trade and the impact of session overlaps.
Given that the Sydney session is the least volatile among the main forex trading sessions, it can be a good training ground for beginners.
Long-term strategies such as position trading might be more suitable due to the lower volatility. However, you can also look for breakout opportunities. Breakouts occur when the price breaks through a significant level of support or resistance, which can happen during the Sydney session.
Keep an eye on economic data releases, central bank announcements, and political events, as these can significantly impact currency values during the Sydney session. For example, if there’s a change in government leadership in Australia or New Zealand, or if there are important economic data releases from these countries, you can expect some action in the respective currencies.
But remember, while the Sydney session may offer a more relaxed trading environment, it’s still important to practice sound risk management and stay informed about market conditions. As you gain more experience, you’ll start to notice patterns and opportunities that can help you make the most of the Sydney session.
Here are some effective tips for Nigerian traders aiming to trade during the Sydney session:
- Trade the Session Overlaps: The period when the Sydney and Tokyo sessions overlap (11 PM – 1 AM EST) offers very high volatility. The increased trading volumes lead to breakouts and the start of trends. Focus on AUD/JPY and NZD/JPY during this period.
- Range Trade AUD and NZD Pairs: During midday in the Sydney session (1 AM – 3 AM EST), volatility tends to be lower. This is an ideal time to range trade the AUD/USD and NZD/USD using support and resistance levels.
- Watch for News Events and Data Releases: Pay close attention to economic news and data releases from Australia and New Zealand. These can lead to spikes in volatility and large breakouts in the AUD and NZD currency pairs.
- Use Technical and Fundamental Analysis: Combine technical indicators like moving averages and trend lines with fundamental factors like interest rates, employment data, and GDP growth rates to predict AUD and NZD price movements.
