For traders in the forex market, timing is everything. In particular, the timing of the London open is of great importance. The London trading session, which begins at 7:00 am GMT and ends at 4:00 pm GMT, is the most active trading session in the forex market. During this time, the market is highly volatile and many traders make significant profits. In this article, we will explore the importance of timing in forex London open trading.
First and foremost, it is important to understand the significance of the London trading session. The London session is the most liquid trading session in the forex market, accounting for over 30% of the total daily trading volume. This means that there are more traders active in the market during this time, creating more opportunities for traders to make profits. Furthermore, many important economic events are released during the London session, such as the Bank of England’s interest rate decision, which can significantly impact the forex market.
One of the key factors that makes the London session so important is the overlap with other major trading sessions. The London session overlaps with the Asian session and the New York session, creating a period of high volatility and activity. As the Asian session comes to a close and the London session begins, there is often a surge in trading activity as traders from both sessions react to news and events that have occurred overnight. This surge in activity can create significant price movements, presenting opportunities for traders to profit.
Another factor that makes the London session so important is the presence of major financial institutions and hedge funds. Many of these institutions have their headquarters in London, and as such, they are active in the forex market during the London session. These institutions can have a significant impact on the market, and their participation can create significant price movements.
Timing is also important in forex London open trading because of the specific trading strategies that are employed during this time. One popular strategy is the London breakout strategy. This strategy involves identifying key support and resistance levels before the London session begins and then entering trades when these levels are broken. This strategy is effective because of the high volatility and volume during the London session, which can create significant price movements that break through key levels.
Another popular strategy during the London session is the news trading strategy. Many important economic events are released during the London session, such as the UK GDP report, which can create significant price movements. Traders who employ the news trading strategy will closely monitor economic calendars and enter trades based on the release of important economic data.
In conclusion, the timing of the London open is of great importance in forex trading. The London session is the most active trading session in the forex market, accounting for over 30% of the total daily trading volume. The overlap with other major trading sessions and the presence of major financial institutions and hedge funds make the London session a period of high volatility and activity. Traders who employ specific trading strategies, such as the London breakout strategy and the news trading strategy, can take advantage of this volatility and create significant profits. Therefore, it is essential for traders to understand the significance of the London session and to time their trades accordingly.
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