NEW YORK SESSION BEHAVIOUR AND MARKET OVERLAPS EXPLAINED

Overview of the New York Session

The New York session is one of the most crucial trading sessions in the global foreign exchange (forex) market. As it overlaps with the London session and represents the world’s second-largest forex trading centre, its significance stems from the sheer volume of transactions and the influential economic data released during its hours.

Operating from 8:00 AM to 5:00 PM Eastern Time (ET), the New York session accounts for approximately 17% to 20% of the daily forex volume. It is particularly known for its continuation or reversal of price moves initiated during the London session. When both the New York and London markets are open, this overlap often results in heightened volatility and liquidity.

Main Trading Hours

• New York session starts at 8:00 AM and ends at 5:00 PM ET.
• The most active trading hours tend to be between 8:00 AM and 12:00 PM ET, when the London market is still open.
• Summer time adjustments may shift trading activity slightly, especially during Daylight Saving Time transitions.

Key Currency Pairs Affected

• EUR/USD: This pair sees significant volatility due to the presence of both the USD and EUR regions being active simultaneously.
• USD/JPY: As the U.S. market becomes active while the Asian session closes, this pair often reacts to U.S. economic releases.
• GBP/USD: Given the overlap with London, substantial movement is typically observed in this pair.

Market Influences

During the New York session, several influential events and factors come into play:

• Economic data releases such as Non-Farm Payrolls, Federal Reserve announcements, and CPI figures are major market movers.
• Institutional trading activity significantly increases the market's depth and liquidity.
• Risk sentiment in global equity markets, such as the S&P 500 and Dow Jones, often spills over into forex trends.

The start of the New York session often sets the tone for the remainder of the trading day. As the day progresses, liquidity may taper off after European markets close, around 12:00 PM to 1:00 PM ET. Still, the final hours leading up to the 5:00 PM ET close may see adjustments based on news, end-of-day positioning, or late-breaking geopolitical events.

Conclusion

Traders should remain attuned to the highly dynamic nature of the New York session. It offers opportunities for both breakout and retracement strategies, especially during its overlap with the London session. With proper risk management and awareness of scheduled news events, the New York session can play a pivotal role in achieving forex trading success.

The London-New York Overlap

One of the most critical periods in the forex market is the London-New York overlap. Occurring between 8:00 AM and 12:00 PM ET, this overlap is considered the most liquid and volatile trading window globally. The confluence of two major financial powerhouses – London and New York – facilitates a surge in market activity, offering prime opportunities for traders.

Why the Overlap Matters

The main reasons this overlap garners so much importance include:

• High trading volume: With traders from both sessions active, market depth increases significantly.
• Sharp price movements: Increased liquidity often results in faster and more pronounced price action.
• News convergence: Critical economic indicators from both European and American calendars tend to be released during this window.

Trading Strategies for the Overlap

Due to the nature of this period, traders often employ specific strategies to capitalise on the volatility, such as:

• Breakout trading: As the markets align, price often breaks out of prior ranges established during the quieter Asian session.
• Momentum strategies: Continued direction driven by economic releases or market sentiment can be leveraged for trending trades.
• Intraday reversals: In some cases, the initial move can be exhausted and a reversal may present itself closer to midday New York time.

Popular news releases during this overlap include:

• U.S. Non-Farm Payrolls (typically on the first Friday of each month)
• Eurozone CPI and GDP figures
• Federal Reserve announcements and speeches

Currency Pairs to Focus On

During the London-New York overlap, particular forex pairs exhibit high volatility, including:

• EUR/USD: Reflects economic fundamentals from both regions
• GBP/USD: Influenced by UK and U.S. data, and political developments
• USD/CAD: Reacts strongly to North American employment and oil data

Risk Management During High Volatility

The increased price action during this time also elevates the risk factor. As spreads narrow and execution speeds elevate, it is critical to:

• Set realistic stop-loss levels based on average true range (ATR)
• Adjust position sizing to account for potential volatility spikes
• Use pending orders for breakout entries, avoiding impulsive trades

Best Practices

To make the most out of the London-New York overlap period:

• Keep track of the economic calendar and news releases
• Use lower timeframes (such as 5M or 15M) to pinpoint entries
• Evaluate correlation between currency pairs to reduce redundancy

This overlap provides fertile ground for increased profitability, especially when combined with disciplined trading methodologies. Whether you're a day trader or scalper, the London-New York overlap deserves focused attention.

End of Session Dynamics

The concluding hours of the New York trading session, extending from approximately 1:00 PM to 5:00 PM ET, display distinct characteristics compared to the earlier high-volatility windows. As the London markets close and European liquidity exits the market, trading momentum tends to diminish and price ranges narrow.

Reduced Volatility

Once the London session ends, volatility in major currency pairs generally drops. This is largely due to:

• Lower trading volume: Many large institutional participants cease operations by mid-afternoon ET.
• Fewer data releases: U.S. economic news is seldom released later in the day.
• Market absorption: Traders begin adjusting positions in response to events earlier in the day.

Opportunities in the Closing Hours

While the end of the New York session is quieter, it still offers strategic value:

• End-of-day positioning: Traders and fund managers may close or hedge positions before the session ends.
• Reversion strategies: As trends stall, mean-reversion or range-trading techniques can become effective.
• Order book thinning: With lower participation, prices may briefly spike or gap on smaller order flows.

Because spreads can widen again as liquidity declines, it’s important for traders to be cautious during this time. Brokers may adjust trading conditions, and sudden moves can occur with limited justification.

Impact on the Asian Session

The conclusion of the New York session bridges into the opening of the Asia-Pacific markets. Moves that occur late in the U.S. session can influence sentiment in Sydney and Tokyo when trading resumes. For instance:

• USD/JPY reactions can filter into Asian risk sentiment
• Position squaring from North American desks may set direction cues for Asia
• Emerging market currencies may adjust in low liquidity environments

Traders holding positions overnight must consider rollover charges, time zone funding adjustments, and broker-specific policies on spreads after 5:00 PM ET.

Technical Setup Reviews

As the day ends, it’s also an ideal time to:

• Review trade performance and journal outcomes
• Identify support/resistance levels for the coming session
• Prepare setups for the Asian market open

Reliable forex traders often use the New York session’s close as a checkpoint for evaluating strategy effectiveness and refining their setup for the next trading day. Long-term swing traders also consider daily candlestick formation which finalises at this point for most charting platforms aligned to the 5:00 PM ET close.

Summary

While not as action-packed as the overlap period, the end of the New York session plays a vital role in daily trading rhythm. It offers key insights for position management, preparation for the next day, and developing discipline through post-market review. Smart traders use this quiet period to their advantage by planning and analysing rather than overtrading in thin markets.