Forex trading is the buying and selling of currencies in the foreign exchange market. The market operates 24 hours a day, with different trading sessions taking place across the globe. The London session is one of the most important sessions in the forex market, and it is critical for traders to understand when it is open and how to trade during this time.
The London session is the second-largest forex trading session in the world, after the New York session. It begins at 8:00 AM GMT (3:00 AM EST) and ends at 4:00 PM GMT (11:00 AM EST). This session is sometimes referred to as the European session, as it overlaps with the trading hours of other major financial centers in Europe, such as Frankfurt, Zurich, and Paris.
There are several reasons why the London session is important in the forex market. The first reason is that it is the most active session in terms of trading volume. The London session accounts for approximately 36% of the daily trading volume in the forex market, according to a report by the Bank for International Settlements.
Another reason why the London session is important is that it is the time when most economic data releases for the European Union are published. These economic indicators can have a significant impact on the forex market, as they provide insight into the health of the economy and can influence the monetary policy decisions of central banks.
During the London session, traders can expect to see increased volatility in the forex market. This is because traders in Europe and other parts of the world are active during this time, and they may be reacting to news and events that occurred overnight or during the Asian session.
Traders who are looking to trade during the London session should be aware of the currency pairs that are most active during this time. The most actively traded currency pairs during the London session are the EUR/USD, GBP/USD, USD/CHF, and USD/JPY. These pairs are the most liquid and have the tightest spreads, which means that traders can execute trades with minimal slippage and at a lower cost.
Traders should also be aware of the trading strategies that are most effective during the London session. One popular strategy is the breakout strategy, which involves identifying key levels of support and resistance and entering trades when the price breaks through these levels. Another strategy is the news trading strategy, which involves trading based on economic data releases and other news events that occur during the London session.
In conclusion, the London session is a critical time for forex traders, as it is the second-largest trading session in the world and is characterized by increased volatility and trading volume. Traders who are looking to trade during this time should be aware of the currency pairs that are most active, the trading strategies that are most effective, and the economic data releases that can impact the forex market. By understanding these factors, traders can make informed decisions and capitalize on the opportunities presented during the London session.
