The foreign exchange market, also known as forex, is a decentralized global marketplace where currencies are traded. It operates 24 hours a day, 5 days a week, across different time zones, making it the largest financial market in the world. The forex market is split into four major trading sessions: the Sydney session, the Tokyo session, the London session, and the New York session. Among these sessions, the London session is considered the most active and volatile period of the day.
The London trading session starts at 8:00 AM GMT (Greenwich Mean Time) and ends at 4:00 PM GMT. However, it’s important to note that the session timing can change depending on the time of year, mainly because of daylight savings. In the UK, daylight savings time starts on the last Sunday of March and ends on the last Sunday of October. During this period, the London session will start an hour earlier for traders in countries that don’t observe daylight savings time.
The London session is responsible for around 30% of the total forex trading volume. It’s considered the second-largest trading session after the New York session. The session’s high trading volume can be attributed to the fact that London is a major financial hub and the capital of the forex market. The session also overlaps with the Asian session, creating high volatility and increased liquidity.
The London session’s opening is characterized by a surge in activity, with traders reacting to news and events that may have occurred during the Asian session or overnight. This can lead to sharp price movements and high volatility, creating opportunities for traders to profit. The opening hour is also crucial for traders who use technical analysis, as they can identify key support and resistance levels and plan their trades accordingly.
During the London session, traders focus on trading the GBP/USD, EUR/USD, and USD/JPY currency pairs, which make up the majority of trading volume. The session’s high liquidity makes it easier for traders to enter and exit trades quickly and at favorable prices. It’s also a good time for traders who prefer swing trading or longer-term positions, as the session’s volatility allows for larger moves and potential profits.
One of the main advantages of the London trading session is that it offers traders the opportunity to trade during their local daytime hours. This makes it more convenient for traders in Europe and the UK, as well as traders in other parts of the world who don’t want to trade during the Asian session’s late-night hours. The session’s high volume and volatility also make it an attractive option for traders who want to trade during a more active and exciting time of the day.
In conclusion, the London session of the forex market is one of the most important and active trading sessions of the day. It starts at 8:00 AM GMT and ends at 4:00 PM GMT, with the timing changing depending on daylight savings. The session’s high trading volume and volatility make it an attractive option for traders who want to trade during a more active and exciting time of the day. It’s also a convenient time for traders in Europe and the UK to trade during their local daytime hours.