Definition
A session overlap occurs when two major forex trading sessions operate at the same time. The three primary forex markets—Asian, European, and American—open and close at different times throughout the day. When their hours intersect, both markets remain active simultaneously. This creates periods of heightened trading activity as participants from both regions execute trades together.
The most significant overlap happens between the London and New York sessions, accounting for roughly 70% of daily forex volume. During these windows, more traders compete for positions, which tightens bid-ask spreads and speeds up order execution. Think of it like rush hour when two major highways merge—traffic increases substantially as vehicles from both routes converge into one flow. Understanding time-of-day effects helps traders identify when volatility and opportunity peak during these overlap periods.
In short: Session overlaps are periods when two major forex markets trade simultaneously, creating the highest volume and liquidity conditions of the trading day.
Example in Action
Most forex traders across Africa don't realize that timing their trades to match the London–New York overlap can dramatically change their results.
This four-hour window from 12:00 PM to 4:00 PM UTC accounts for roughly 70% of daily forex volume. Spreads tighten, liquidity jumps, and pairs like EUR/USD move faster.
Nigerian, Kenyan, and South African traders who align with this period often see smoother order execution and lower costs.
Understanding the best trading times for each currency pair helps traders match their activity to periods of maximum liquidity and tighter spreads.
Why It Matters
Trading during session overlaps isn't just about convenience—it directly affects how much traders pay and whether orders get filled at expected prices. Tighter spreads during London-New York overlap mean lower costs per trade across African markets.
Faster execution reduces slippage risk, making stop-loss placements more reliable. Outside overlaps, wider spreads and slower fills increase transaction expenses, directly impacting profitability for traders throughout the continent.
Understanding how easily currency pairs can be traded during different periods helps traders time their entries and exits to minimize costs and maximize execution quality.
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