Forex trading is a 24-hour activity, with different trading sessions operating around the clock. The London session, also known as the European session, is one of the most important sessions for forex traders. It is the second largest trading session after the New York session and accounts for approximately 30% of the total forex turnover.
So, what time does the London session start in forex trading? The London session starts at 8:00 am GMT and runs until 4:00 pm GMT. However, it is important to note that the opening time of the London session may vary depending on daylight saving time. During daylight saving time, the London session starts at 7:00 am GMT, and during standard time, it starts at 8:00 am GMT.
The London session is known for its high volatility and liquidity, making it an ideal time for traders to trade major currency pairs such as EUR/USD, GBP/USD, USD/CHF, and USD/CAD. The session overlaps with the Asian and American sessions, providing traders with a unique opportunity to capitalize on the market movements.
During the London session, the forex market is dominated by European traders, including banks, financial institutions, and hedge funds. The European Central Bank (ECB) also releases important economic data during this session, which can significantly impact the market. Traders should, therefore, keep an eye on economic releases such as interest rate decisions, inflation data, and GDP reports.
The London session is also known for its news flow, with major news events being released during this session. News events such as Brexit updates, elections, and geopolitical tensions can significantly impact the market, causing sharp price movements. Traders should, therefore, be prepared for sudden market movements and have a solid risk management plan in place.
One of the advantages of trading during the London session is the tight spreads offered by brokers. This is due to the high liquidity during this session, which results in lower trading costs. Traders can, therefore, enter and exit trades quickly and at a lower cost, increasing their chances of profitability.
Another advantage of trading during the London session is the opportunity to benefit from the market’s momentum. During this session, the market tends to move in a particular direction, providing traders with an opportunity to trade with the trend. Traders can also use technical analysis tools such as support and resistance levels, trend lines, and indicators to identify potential trading opportunities.
In conclusion, the London session is an important trading session for forex traders. It provides traders with high volatility, liquidity, and tight spreads, making it an ideal time to trade major currency pairs. Traders should, however, be prepared for sudden market movements and have a solid risk management plan in place. By understanding the characteristics of the London session, traders can improve their chances of profitability in the forex market.