Best Currency Pairs to Trade in the Sydney Session

Karim Yousfi

Experienced trader & analyst

A.Karim Yousfi is a experienced trader and analyst. He is managing a team of 5,000 traders at Audacity Capital London Trading Floor.

Thanks to its round-the-clock trading, the global forex market continues to attract investors drawn from around the world. It’s what has helped make it the biggest market today.

Continuous trading is possible as the FX market falls into four trading sessions: Sydney, London, New York, and Tokyo.

Understanding the Sydney session forex pairs, market hours, and the best times to execute trades in different sessions can help you earn a tidy profit.

Below, you’ll learn everything there’s to learn about the Sydney session, including the best pairs to trade during the Sydney session.

When Does the Sydney Session Begin?

The Sydney session is the most appealing for traders, primarily due to favorable forex market hours. FX market hours refer to the schedule forex participants need to observe when trading.

Typically, the market operates round the clock during the week but remains closed on weekends. But weekends are often squeezed during the different time zones.

Although there is a time overlap in the trading sessions, traders are quick to accept that the time zones below are the most active for the four trading sessions:

  • London: 3 a.m. to 11 a.m. (EST}
  • New York: 8 am to 5 pm (EST)
  • Sydney: 3 pm to 12 am. (EST)
  • Tokyo: 7 pm to 4 am. (EST)
Image showing different trading times

London and New York trading sessions are the busiest of the four, and their overlap accounts for the highest volume of trades on any given day.

Is the Sydney Session the Best Time to Trade?

Forex trading is unique due to its varied hours of operation. Though the trading week begins on Sunday at 5 pm EST, not all hours are ideal for trading Sydney session forex pairs.

Experienced traders will tell you that the best time to trade is when the market is active. And this usually happens when more than one markets are open.

During such a time, the trading atmosphere will become heightened, leading to significant fluctuation in the trending pairs. For the Sydney session, you need to wait for the overlap.

The Sydney session usually overlaps with the Tokyo session. Although this overlap isn’t as volatile as the US/London overlap, it does offer exciting trade opportunities.

Experienced traders are assured of an opportunity to trade during a session of increased pip fluctuation. Traders should aim to trade the EUR/JPY pairing, as this overlap heavily influences them.

The two-hour overlap is enough to make some sizable trade movements.

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Best Tips for Trading During the Sydney Session

It’s not uncommon for traders to feel lost when trying to determine which trading strategies to apply for major currency pairs and exotic currency pairs.

Another thing most traders can’t seem to settle on is whether to become a day trader, scalper, news trader, position trader, or swing trader. All these are different trading strategies.

Knowing which strategy to use can ensure you don’t fail while others succeed. Depending on how you would like to execute your trades, below are some strategies to consider:

  • Position trading: It allows you to hold your trades for weeks and sometimes months, making it the best long-term approach.
  • Swing trading requires you to trade for one to four hours, where your concern lies in capturing a single move in the Sydney session forex pairs.
  • Day trading calls for you to trade for between five and fifteen minutes, with the idea being to capture intraday volatility. Here, you must trade the most volatile session.
  • Scalping isn’t an ideal strategy for the Sydney session as the transaction costs can easily take up all your profits.

Knowing which strategy works best for you can help you save weeks of wasted effort, time, money, and endless frustration. Ensure you ask yourself three questions before trading:

  1. Are you looking to make an income or grow wealth with your trades?
  2. How much of your available time can you set aside for trading?
  3. Which forex trading strategy suits you the best?

You should learn to draw support and resistance to make it as a trader. Without this, you’ll likely use the wrong strategy, causing you to experience untold losses.

What Are Currency Pairs?

A currency pair refers to a quotation of two diverse currencies. Here, one currency gets quoted against another.

In currency pairs, the currency listed first is called the base currency. The second currency is, in this case, the benchmark and is known as the quote.

You need to compare currency pairs against each other to understand how much of the quote currency is needed to purchase a single unit of the base currency.

Normally, there’s a three-letter symbol associated with each currency, helping you easily identify the currencies during the Sydney session.

Image showing different currencies and their prevailing rates

The Best Pairs to Trade During Sydney Session

You can choose to trade several currency pairs during the Sydney session. They include USD/JPY, AUD/NZD, EUR/USD, USD/CHF, and GBP/USD.

But while there are several to consider, there are two currency pairs that easily stand out:

USD/JPY: Best Liquid Currency Pairing and the Most Popular

The USD/JPY pairing is closely related, and the value of one can quickly influence the value of the other.

Looking at this pairing, you get to see how many Japanese Yens you need to buy a single US dollar. It also serves as the most popular pairing during the Sydney session.

AUD/USD: Best Trading Pair Due to Its High Activity

The AUD/USD pair is the most traded pairing during the Sydney trading session. Day traders love it because of its high volatility, performance, and stability.

Best Currency Pair to Trade During Sydney/Tokyo Session Overlap

The Sydney/Tokyo session overlap occurs from 2 am to 4 am EST and represents a period when both markets are open simultaneously.

You can expect high volatility and liquidity during this period, making it the best time to execute your trades.

However, this overlap isn’t as volatile as the US/London one, although it offers some exciting trading opportunities.

The best currency pair to trade during the Sydney/Tokyo overlap is the EUR/JPY pair.

What Can Affect Currency Pairs During the Sydney Trading Session?

The primary fundamentals affecting currency pairs are overnight changes in interest rates by central banks, politics, and economic data.

  • Interest Rates: Central banks are mandated to maintain financial and monetary stability. They, therefore, need to influence interest rates for this to happen. An overnight increase in the interest rates can lead to increased demand for the currency in question.
  • Politics: Changes in policies, trade wars, corruption scandals, and elections can bring about instability which is immediately reflected in the forex market. The government of the day can introduce policies that can affect the economy positively or negatively.
  • Economic Data: Economic releases give traders an idea of how the economy is performing. The reports can influence Non-farm payrolls, inflation data, retail sales, and gross domestic product.
  • Volatility: Traders tend to take big positions on non-volatile positions and small positions on the more volatile currencies. Changes in political stability, unexpected changes in the interest rates, and a change in the economic outlook can lead to volatility.

Which Is the Best Forex Pair to Trade in The Sydney Session?

No single pair stands out from the rest when it comes to the Sydney session. However, the AUD/USD and USD/JPY pairs tend to offer better returns than the others.

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Frequently Asked Questions About Sydney Session Forex Pairs

  • What pairs feature the most during the Sydney trading session?

    Common currency pairs you’re likely to encounter during the Sydney session include the EUR/JPY, AUD/USD, NZD/USD, and USD/JPY pairs.

  • What’s the best time to trade during the Sydney session?

    The best time to trade is between 2 am and 4 am when the Sydney/Tokyo overlap is underway. It’s a period characterized by high liquidity and increased trade volumes.

  • What has made the Japanese Yen (JPY) so strong?

    The Japanese economy is influenced heavily by the manufacturing sector instead of the commodities market, which has helped strengthen the Yen. It’s also what has helped it perform better than all the other major currencies.