Hello, nazzeem
The time shift in New Zealand primarily affects traders in New Zealand. It has essentially no effect on traders elsewhere in the world.
I’m aware that my statement above contradicts most of what you will read on the internet and elsewhere, about the so-called “opening” and “closing” times of various trading sessions in the retail forex market.
What follows (below) is a new way of looking at forex sessions and session times which (in my opinion) reflects the actual ebb and flow of liquidity and trading volume in this market. You may or may not agree with this way of defining sessions and times. If you agree, you can read more about it HERE. [I]If you disagree,[/I] then you should choose one of the many other classification systems described on the internet (and in the Babypips School of Pipsology). Some of those classification systems give importance to the time zone in New Zealand, but most do not.
So, based on liquidity and trading volume in the worldwide currency market, here is how I define forex trading sessions:
The vast majority of the world’s foreign exchange business is handled by 10 or 15 mega-banks in three locations — and New Zealand is not one of those locations. The three locations are Tokyo, London, and New York. During the normal business days in London and New York, those two markets dominate currency trading, and they call the shots. The rest of the world falls in line with the market-making that occurs in London and New York, starting at about 7 am London time, and winding down at about 5 pm New York time. That’s 15 hours during which London and/or New York lead the forex market, and the rest of the world follows. Those 15 hours comprise 3 distinct “trading sessions” defined by liquidity and trading volume: the London Morning Session, the London/New York Overlap Session, and the New York Afternoon Session.
Trading in the remaining 9 hours of the 24-hour trading day is driven by markets in the Asia/Pacific (APAC) region, in which Singapore, Hong Kong, and Tokyo are the dominant players. This 9-hour session is referred to either as the APAC Session, or the Asian Session, or simply as the Tokyo Session. Tokyo is traditionally singled out as the main driver of this session (and, therefore, this session is typically named after Tokyo), because until recently Tokyo was the largest market (by volume) in the APAC region. And Tokyo remains the regional headquarters for the world’s mega-banks, despite the fact that both Singapore and Hong Kong are now larger players (by volume) than Tokyo in the currency market.
So, what about Australia and New Zealand? Measured by foreign exchange trading volume, the market in Sydney (Australia) is a minor player, compared to Singapore, Hong Kong, and Tokyo. And the market in New Zealand is significantly smaller than the market in Sydney.
It’s important to note that the Tokyo Session does not begin when one of the various markets in the APAC region opens. Rather, it begins when the New York Afternoon Session ends, at which time the maga-banks begin transferring their “books” (open positions and open orders) from their New York trading desks to their Tokyo trading desks. In similar fashion, the Tokyo Session ends when the London Morning Session begins, at which time those “books” are handed off from Tokyo to London.
So, the trading sessions that you should be focused on, and their current “opening” and “closing” times in your South Africa time zone (SAST), are as follows:
Tokyo Session — 11 pm SAST (2100 GMT) - 8 am SAST (0600 GMT)
London Morning Session — 8 am SAST (0600 GMT) - 1 pm SAST (1100 GMT)
London/New York Overlap Session — 1 pm SAST (11 GMT) - 6 pm SAST (1600 GMT)
New York Afternoon Session — 6 pm SAST (1600 GMT) - 11 pm SAST (2100 GMT)
These times will not change until the U.K. (and all of Europe) end Daylight Saving Time and return to Standard Time on October 30. One final change will occur when the U.S. ends DST and returns to Standard Time on November 6. More about those changes, when the time comes.
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