Features of the European trading session

Many traders choose Forex trading because it allows you to trade at any time of the day. But most often trading sessions are tied to the time zone in which stockbrokers of certain countries live and work.

Therefore, the trading day is divided into many sessions, the most famous of which are Asian , American and European . They are also called sessions of Tokyo , New York and London . Sometimes sessions overlap in time, but each has its own unique characteristics. Therefore, it makes no sense to look for the perfect time for a successful trade.

When sessions of several countries overlap, as a rule, the volume of trade in the currency of the partner countries increases. Therefore, European companies entering the stock markets will trade the euro in large volumes. and at night, euro trading will naturally decline if partner institutions in other countries are closed.

The countries trading in the European session at a certain moment have a direct correlation with the currency they trade. Consequently, each session is always slightly different in the degree of activity of specific currency pairs, market volumes and volatility.

What are the differences characteristic of the European session?

The largest number of participants is on the market at 8:00 GMT, when the session opens in London . At the same time, Japanese traders have the last hour to trade. It is during the London session that more price moves occur than the Asian one. This is due to the fact that Asian traders close their positions in their region, and European traders open them in Europe.

At that time, while the European session lasts, all currency pairs are distinguished by fairly standard behavior . This means that you can freely trade in any currency pairs. Due to this, trading volumes increase significantly, and spreads are at a rather low level.

Since almost 38% of the global trading volume is concentrated on the London market, the liquidity of securities is also high . For comparison – in the American session, trading volume is 17%, and in Japan – 6%. Therefore, if you trade during the London session, you will be in a highly liquid market.

Overlapping sessions

Their peculiarity is that when two sessions coincide in time, both Europeanand Japanese , at that time the largest number of traders are trading at the same time . This in turn affects the market conditions – liquidity increases, which means that the probability of slipping is reduced, orders are more likely to be executed, spreads for currency pairs are reduced. Everything suggests that this time is excellent for trading.

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The same thing happens when the European and American sessionsoverlap in time – the activity rises just as well. Price maneuvers become volatile, quickly fluctuating in all directions, especially when the overlap period is just beginning. And then you need special care to make deals.

You should also be careful when the Asian session and the American session intersect , because the volume of the market at this particular time is extremely low.

In addition to overlays on market conditions affect the national holidays, weekends American and British banks. After all, if these countries do not participate in trade, the volume and liquidity of the market will be significantly reduced .

Remember that the nature of trading is influenced by the release of news and reports. There may be quick price maneuvers in any direction. Banks and institutions close positions at this time, therefore the price fluctuates. Since the time of the release of the report is known in advance, then at least volatile conditions you can avoid.

Exchange trading in Germany and taxation

In Germany, there are many successful students of Alexander Gerchik , so it makes sense to consider the characteristics of stock trading and taxation on the example of Germany.

In the German tax system there are the following types of payments, which are divided into three main categories :

  1. income tax;
  2. property tax;
  3. consumption tax.
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  1. Taxes on income:
  • corporate income tax;
  • business tax;
  • income tax from individuals.
  1. Property taxes:
  • land taxes;
  • inheritance;
  • on donation.
  1. Consumption taxes:
  • VAT;
  • property tax.

For German traders, the most relevant income tax is Einkommensteuer , which is paid on capital gains. Revenues from currency trading in Forex areregulated like any other securities transactions. Moreover, foreign exchange operations are mainly engaged in banks, whose activities are controlled by a special department of the Ministry of Finance.

Since 2005, a law has been in force in Germany , according to which brokers are obliged to provide customers who trade currencies with at least minimal protection against risks .

In addition, from January 1, 2009, a profit tax of 25% of capital was approved . Moreover, this tax is levied on any trading operations on the currency or stock exchanges, if a profit was obtained on them minus the non-taxable minimum amount of funds.

If you are a resident of Germany, then for you this amount will be 801 euros per person or 1602 euros for a married couple. In other words, if for the calendar year the trader received a total profit from transactions less than 801 euros, he does not pay income tax.

How it looks in practice

You are applying to the bank to release your capital from taxation. Since banks are tax agents in Germany , the trader must take any actions related to money with a representative of the bank .

If the total profit for the year exceeds the amount of the non-taxable minimum, the bank will automatically withhold a 25% tax on profits and add a tax surcharge. And then the total amount of tax will be 26.38% .

I must say that there are some ways that allow you to escape from taxes . One of them is trading through offshore brokerage houses . But before contacting them, think a hundred times, since such companies have dubious reliability. Still, with legal cooperation with the bank, your funds are guaranteed to be protected.

findings

  • You can trade on Forex 24 hours a day.
  • Time is divided into three main trading sessions – European, American and Asian.
  • The greatest activity in the financial markets is observed at the time when the sessions overlap in time.
  • The most active session is European and its volume is the largest on the Forex market.
  • Special vigilance must be exercised during the news release.
  • On national holidays and weekends at banks, trading in the markets declines.
  • Carefully study the Tax Code of the country in which you trade, pay taxes and sleep well.

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