Sessions, news and the calendar

The foreign exchange market runs from Monday morning in Asia to Friday evening in New York. It does not close for a lunch break, but activity is not even across the day. Trading is usually described in three blocks: the Asian session, the London session and the New York session. Each block has its own busiest hours, and each one overlaps the next for a short time.

The Asian session is the quietest of the three for EUR/USD. Tokyo and Sydney are active, but the pair is driven mainly by European and American money. Spreads on EUR/USD are often at their widest during this block because fewer orders are being matched. A wide spread is a cost paid on entry and again on exit, so a quiet hour can be an expensive hour.

London is the largest block by turnover. It opens around 08:00 UK time and runs into the afternoon. New York opens several hours later and the two overlap. That overlap is usually when EUR/USD moves most and when spreads are tightest. Tight spreads lower the cost of every trade, which is why many beginners find the overlap the least punishing time to watch the market.

The session times shift twice a year. The UK and the United States change their clocks on different dates, so the gap between Lagos time and London time is not fixed. In the weeks when one country has changed and the other has not, every session starts an hour earlier or later than the week before. Check the current difference rather than trusting a number you learned last month.

An economic calendar lists the dates and times of official releases. Examples include inflation figures, employment reports and central bank rate decisions. The calendar is published in advance, so the times are known. What is not known is the number that will be released and how the market will react to it.

In the seconds around a major release, many participants withdraw their orders at the same time. Fewer orders means a wider spread, because the gap between the best buy price and the best sell price grows. On EUR/USD a spread that is normally around 1 pip can widen to several pips, and in fast conditions more than that. The exact figure varies between brokers and between releases, so no fixed number can be promised.

A stop order is filled at the market price once it is triggered, not at the price written on the order. If the spread is wide when the stop triggers, the fill can be further away than expected. A stop placed to limit a loss of a few pips may close at a larger loss because the spread alone moved the price. This is why the page warns that a stop which looked safe can be hit by the spread rather than by the market's direction.

The cost of that wider spread is paid in naira like any other cost. If one pip on a standard lot is 10 USD and the exchange rate is ₦1,550 per USD, one pip is ₦15,500. A spread of 10 pips on the same trade is ₦155,000, before any commission. The figure is an estimate because your broker may round the pip value or use a different exchange rate for deposits and withdrawals.

The cheapest decision available is often to place no order at all. If the calendar shows a major release in the next few minutes, waiting costs nothing. Trading through the release costs the wider spread on entry, on exit, and possibly on the stop. Avoiding one expensive window can matter more to a small account than finding one extra trade.

Some readers prefer to trade after the release, once the first burst has passed and the spread has returned towards its normal level. Others avoid the whole day around a rate decision. Neither approach is a rule, and neither guarantees a better result. The point is to make the choice deliberately, with the calendar open, rather than discovering the release after the order is filled.

Position size is the other control. If a wider spread is possible, a smaller position keeps the naira cost of that spread inside the amount already planned as risk. The same spread on a smaller lot costs proportionally less. Sizing down does not remove the risk, but it stops one release from costing more than the plan allowed.

Spreads also widen at the daily rollover, when positions are carried from one trading day to the next, and around public holidays when liquidity is thin. These windows are listed by brokers rather than by the economic calendar. Check your broker's schedule, because the exact times and the size of the widening vary between firms. The naira cost of a wide spread is real whether or not a news headline caused it.