The forex market is an around-the-clock market, meaning that trading is conducted 24 hours a day, five days a week. The market is divided into three major trading sessions: the Asian, European, and North American sessions. Each session has its own unique characteristics and trading opportunities. In this article, we will focus on the London session in forex.
The London session is the most active and liquid trading session in the forex market. It starts at 8:00 AM GMT and ends at 4:00 PM GMT. During this time, the market is driven by the activity of traders in London, the financial capital of Europe. The London session accounts for about 36% of the total daily forex trading volume, making it the most important session for traders.
One of the reasons why the London session is so important is because it overlaps with the Asian and North American sessions. This creates a period of high trading activity and volatility as traders from different time zones come together to trade. The overlap between the London and Asian sessions is particularly significant as it accounts for the majority of the trading volume in the forex market.
The London session is also important because it is the time when major economic news releases are announced. The UK is one of the largest economies in the world and many important economic indicators, such as the GDP, inflation, and employment data, are released during the London session. These news releases can have a significant impact on currency prices and create trading opportunities for traders.
During the London session, the most actively traded currency pairs are the EUR/USD, GBP/USD, and USD/CHF. These pairs are highly liquid and offer tight spreads, making them popular among traders. In addition to these pairs, traders also trade other major pairs, such as the USD/JPY and AUD/USD.
One of the characteristics of the London session is its high volatility. This volatility is driven by the high volume of trades that are executed during this session. Traders who are looking for short-term trading opportunities, such as scalping or day trading, often prefer the London session because of its high volatility.
Another characteristic of the London session is its tendency to form trends. This is because the London session is followed by the North American session, which is also a highly liquid and active session. Traders who are looking for longer-term trading opportunities often use the London session to identify trends that they can then follow during the North American session.
In conclusion, the London session is the most active and liquid trading session in the forex market. It starts at 8:00 AM GMT and ends at 4:00 PM GMT. During this time, the market is driven by the activity of traders in London, the financial capital of Europe. The London session accounts for about 36% of the total daily forex trading volume, making it the most important session for traders. Its high volatility and tendency to form trends make it an attractive session for traders who are looking for short-term or long-term trading opportunities.
