Stepping into the world of foreign exchange trading, especially in the Philippines, may seem daunting at first glance. With the market buzzing 24 hours a day, how does one navigate and choose the right time to trade？ Understanding the different Forex sessions and their timelines can make a significant difference in planning your trading strategies and achieving profitable trades.

This article will guide Filipino traders and anyone interested in trading during the Philippine Standard Time (PST) through the maze of Forex session times. We'll touch on when you could potentially expect the highest volatility and liquidity for your favorite currency pairs and provide helpful strategies to consider.

What are Forex Trading Sessions？

Forex Trading Sessions refer to the operational times of the global forex market which operates 24 hours a day during the weekdays. The market is not centralized in a physical location; instead, it takes place on electronic networks of banks, institutions, and individual traders worldwide.

The forex market is divided into four major trading sessions that are named according to the principal financial centers open during those times: Sydney Session, Tokyo Session, London Session, and New York Session. We will explain this in detail in the following articles.

Forex Session Times in the Philippines

1. Sydney Session (5:00 AM - 2:00 PM PST):The Sydney trading session marks the start of the Forex trading day. It is during this time that the Australian dollar (AUD) experiences the highest volatility. Traders looking to trade AUD pairs like the AUD/USD or the AUD/JPY would find this session very important.
2. Tokyo Session (7:00 AM - 4:00 PM PST):Known as the Asian session, it's Japan's turn to conduct business. The Japanese yen (JPY) experiences its greatest volatility during this time. As a result, currency pairs involving the yen, such as the USD/JPY or the AUD/JPY, can experience greater price fluctuations.
3. London Session (3:00 PM - 12:00 AM PST):Often regarded as the most volatile session of all, the London session sees a lot of trading activity. Two major currency markets are active during this session: Great Britain and the Eurozone. Hence, currency pairs involving the British pound (GBP) and euro (EUR), like the GBP/USD or EUR/USD, can exhibit large price swings. The overlap of this session with the Tokyo session and the start of New York session heightens volatility even further.
4. New York Session (8:00 PM - 5:00 AM PST):Being the last session of the day, the U.S. financial market overlaps with the London session for roughly four hours. This overlap, known as the “overlap period,” is often the most vibrant in terms of trading activity. It's during this time that currency pairs involving the U.S. dollar (USD) experience significant movement.

Best Currency Pairs to Trade in the Philippines

The best currency pairs to trade in the Philippines often depends on the time of day and the active global market sessions. However, typically, the most popular and highly traded currency pairs among Filipino traders include:

1. USD/PHP - US Dollar and Philippine Peso: As the local currency pair, dynamics of the local economy can highly influence the trading strategy.
2. EUR/USD - Euro and US Dollar: This is the most liquid forex pair in the world and often experiences significant movement during the London and New York trade sessions.
3. USD/JPY - US Dollar and Japanese Yen: During the Tokyo and Sydney sessions, this pair can be more volatile
4. GBP/USD - British Pound and US Dollar: Just as with the EUR/USD, this pair sees significant movement during the London and New York sessions.
5. EUR/JPY - Euro and Japanese Yen: This pair sees increased activity during the times when European and Asian markets overlap.
6. AUD/USD - Australian Dollar and US Dollar: This currency pair is generally more active during the Sydney trading session.

Is Forex Trading Allowed on Weekends in the Philippines？

Forex trading is generally not allowed on weekends in the Philippines, or any other country, as the global forex market is closed. The market operates 24 hours a day for five days a week - from 5 p.m. EST on Sunday to 5 p.m. EST on Friday. The market's operation is linked to the operational hours of banks in the various global financial markets, which are typically closed on weekends.

Best Time to Trade Forex in the Philippines

The best time to trade Forex in the Philippines largely depends on the currency pairs you want to trade and their respective market sessions, but generally, the most volatile trading periods occur when two market sessions overlap. Here are some key points to consider:

Tokyo and Sydney Session Overlap (7:00 AM - 2:00 PM PST): If you are trading AUD or JPY pairs, this would be an ideal time since the markets in both Australia and Japan are open. This is when the liquidity and volatility for these pairs can increase, providing more trading opportunities.

Tokyo and London Session Overlap (3:00 PM - 4:00 PM PST): This overlap is brief but can lead to significant movements in the market, especially for pairs containing GBP, EUR and JPY.

London and New York Session Overlap (8:00 PM - 12:00 AM PST): This is arguably the best time to trade Forex in the Philippines, particularly for pairs involving GBP, EUR, and USD. This is the most volatile period of the day as its when the financial powerhouses of London and New York are both active. A large percentage of all forex trading generally happens during this period.

Start of New York Session (8:00 PM PST): It's also worth noting that economic news from the U.S., which can significantly move the market, is typically released at the beginning of the New York session.

Factors Influencing Forex Market Hours

Despite the market's round-the-clock functioning, not all hours are equally opportunistic for traders. It's crucial to realize that certain hours offer increased volatility and better chances for profit, primarily influenced by core factors including different time zones, daylight savings adjustments, public holidays, crucial economic events and inter-market overlaps.

Differences in Time Zones: The forex market operates in different time zones across major financial hubs across the world like Sydney, Tokyo, London, and New York. Hence, as one financial market closes, another one opens which accounts for the 24 hours operation of the forex market.

Daylight Savings Time: The adjustment for daylight savings by different regions could slightly shift market hours. This is due to the advancement of the clock during summer months to utilize more daylight and pushing back an hour when winter begins.

Public Holidays: The Forex market might be open 24/7, but it isn't active on certain public holidays like Christmas, New Years Day, and Easter. Trading on these days can be unpredictable due to lower participation.

Economic Events: Important economic data releases and events can lead to increased volatility in the market. News related to interest rates, unemployment rates, economic policy changes, or economic crises can lead to significant movements in the forex market.

Market Overlaps: The most volatile trading times in the forex market occur during overlaps between the different trading sessions when there are increased numbers of participants trading, leading to higher transaction volumes and volatility.

Strategies for Trading During Different Session Times

1. Despite the market's round-the-clock functioning, not all hours are equally opportunistic for traders. It's crucial to realize that certain hours offer increased volatility and better chances for profit, primarily influenced by core factors including different time zones, daylight savings adjustments, public holidays, crucial economic events and inter-market overlaps.

Trading strategies during different session times generally revolve around the knowledge of which sessions offer the highest liquidity and volatility for specific currency pairs. Here are a few strategies:

1. Asian Session Strategy: Given the relatively lower volatility compared to the other two major sessions, traders could consider a range trading strategy for this period. They would identify currency pairs that are trading within a defined price range (or 'channel') and then buy at the lower bound and sell at the upper bound of this range.
2. European Session Strategy: Since this session typically has the highest volatility, breakout strategies or momentum strategies are popular. This involves identifying key levels that price can 'break out' from to start a new trend and placing trades based on these movements.
3. Overlapping Session Strategy: As mentioned, the highest volatility occurs when the London session overlaps with the New York session. Traders often employ trend-following strategies during this period where they try to identify trending currency pair movements and enter positions consistent with the identified trend.
4. News-Based Strategy: Given that important news releases typically happen at the start of a major market session, some traders use a strategy that seeks to exploit price movements resulting from major news releases.
5. End of Day Strategy: Some traders prefer to avoid the increased volatility and unexpected price swings that can occur during active market hours. They might choose to execute trades at the end of the New York session when price movements are often more predictable, guided by a comprehensive review of the day's events and news.
6. New York Session Strategy: This session often offers high liquidity and volatility for USD-based pairs. Traders could use Swing Trading strategies which involve identifying 'swings' in currency pair prices and capturing gains from these swinging trends.

How do Novice Traders Choose the Best Trading Hours in the Philippines？

Choosing the best trading hours can be a critical factor for success, particularly for novice traders. The best hours typically depend on your trading strategy, the currency pairs you're focusing on, and your personal circumstances. Here are four tips for novice traders to choose the best trading hours:

1. Understand Market Sessions: Firstly, it's vital to understand that the Forex market operates 24 hours a day, five days a week, and is divided into four main sessions: Sydney, Tokyo, London, and New York. Each session aligns with the standard working hours in these cities and trades the currencies in their respective regions more heavily.
2. Consider Overlapping Sessions: The most significant movements typically occur during session overlaps, because global market participants are most active during these periods. This could influence your decision if you're using a volatility-based strategy.
3. Know Your Currency Pairs: Each currency is most heavily traded during its home market's hours. For example, if you're trading the EUR/USD, you might see more price movement during the London and New York sessions when both American and European banks and other financial institutions are open.
4. Balance Trading and Personal Schedule: Some of the potential 'best' trading times may not align with your schedule. As a novice trader, it's important to ensure that you can be fully focused when you trade, so pick a session that suits your lifestyle and commitments.