Overlaps and session ranges
Lesson 10 · about 9 min
Once you know when each centre is active, the useful next step is to measure how far each pair actually moves in each window. Those numbers set your stops, your targets and your expectations. Guessing them is how beginners end up with a 15-pip stop on a pair that moves 15 pips in the noise of a single hour.
The two overlaps
There are two periods when two major centres are open at once:
| Overlap | Eastern Time (winter) | What happens |
|---|---|---|
| Tokyo / London | 03:00 to 04:00 | Short; the Asian range often breaks as European desks arrive |
| London / New York | 08:00 to 12:00 | Longest and deepest; US data at 08:30 and 10:00; most institutional flow |
The London/New York overlap is where a beginner should first learn to trade. Spreads are tightest, moves are cleanest, and the four-hour window fits a normal life. The Tokyo/London overlap is briefer and mostly interesting for yen crosses.
Outside the overlaps, "single-centre" hours (Tokyo alone, New York afternoon alone) are quieter, and the period after New York closes and before Tokyo starts (17:00 to 19:00 ET) is the thinnest of the entire day.
Average daily range
The average daily range (ADR) of a pair is the mean of its (high − low) over some number of days, usually 10 or 20. It is the single most useful number for calibrating stops and targets.
Illustrative values in a moderate-volatility regime:
| Pair | ADR (pips) | Asian-session range | London-session range | New York-session range |
|---|---|---|---|---|
| EUR/USD | 70 | 25 | 50 | 45 |
| GBP/USD | 95 | 30 | 70 | 60 |
| USD/JPY | 80 | 40 | 50 | 50 |
| AUD/USD | 60 | 30 | 40 | 40 |
| USD/CAD | 70 | 20 | 45 | 55 |
| GBP/JPY | 150 | 55 | 100 | 90 |
| EUR/GBP | 40 | 12 | 30 | 25 |
The session ranges do not add up to the ADR because sessions overlap and the day's high and low can both come in the same session. Treat every number in the table as a starting point and replace it with your own measurement for the current month; ranges roughly double in a crisis and halve in a summer lull.
Using ADR to set expectations
Three rules of thumb:
- A stop much smaller than a third of the session range is noise. If London's EUR/USD range is 50 pips, a 10-pip stop is placed inside the normal wobble of a single hour.
- A target much larger than the remaining ADR is hoping. If the pair has already moved 60 pips of a 70-pip ADR by 10:00 ET, a further 50-pip target needs an above-average day.
- Session-range breakouts are the most-watched pattern in FX. The Asian high and low on EUR/USD are on every London desk's screen, and the first hours of London frequently test or break them. That does not make breakouts automatically profitable; it makes them crowded, which cuts both ways.
Volatility by weekday
Ranges also vary across the week. Monday is often the quietest day, especially the Asian session, because the weekend's news has been priced and the week's data has not started. Tuesday through Thursday carry most of the scheduled releases. Friday morning can be busy (NFP on the first Friday) and Friday afternoon is typically dead as positions are squared before the weekend.
| Day | Relative range (EUR/USD, illustrative) |
|---|---|
| Monday | 0.8 × ADR |
| Tuesday | 1.0 × ADR |
| Wednesday | 1.1 × ADR |
| Thursday | 1.1 × ADR |
| Friday | 1.0 × ADR morning, 0.5 × afternoon |
Key idea: Measure the range of your pair in the session you trade, then set stops and targets as fractions of that number. A stop that is not sized to the pair's actual movement is not a risk decision; it is a coin flip with a fee.
Measuring it yourself
You do not need a special indicator. On a one-hour chart:
- For each of the last 20 trading days, note the day's high and low and subtract. Average them: that is the 20-day ADR.
- For the session you intend to trade, note the high and low between the session's open and close. Average the 20 values: that is your session range.
- Repeat monthly. Update the numbers in your plan.
Most charting platforms also have an ADR or "average true range (ATR)" indicator. A 14-period ATR on the daily chart is close to the 14-day ADR and updates itself.
Try it: Compute the 20-day ADR and the 20-day London-session range for your first-choice pair. Then write down the stop distance you had been planning to use. If it is under a third of the session range, note that you would have been stopped out by normal noise most days.
Recap
- Two overlaps exist; London/New York (08:00 to 12:00 ET) is the deepest and the best first window for a beginner.
- Average daily range (ADR) and session range are the numbers that calibrate stops and targets.
- Illustrative ADRs: EUR/USD around 70 pips, GBP/USD around 95, GBP/JPY around 150, but measure the current month yourself.
- Stops inside the noise of a single hour and targets beyond the remaining ADR both fail structurally.
- Monday and Friday afternoon are quiet; Tuesday to Thursday carry most movement.
See it drawn
Original diagrams for the ideas on this page. Illustrative, not real market data.