The foreign exchange market operates 24 hours a day, five days a week. During this time, different trading sessions are active, each with its own characteristics and market participants. The London session is one of the most important trading sessions in forex, and it is widely regarded as the most active and liquid trading session.
The London session starts at 8:00 AM GMT and ends at 4:00 PM GMT. This eight-hour window covers the hours of operation for the financial markets in London, which is the largest financial center in the world. The London session overlaps with other major trading sessions, such as the Asian and New York sessions, creating a period of high trading activity and volatility.
The London session is characterized by high trading volumes, tight spreads, and high liquidity. This is because London is home to a large number of banks, financial institutions, hedge funds, and other market participants that are actively engaged in forex trading. The London session accounts for around 35% of the total daily trading volume in forex, making it a crucial trading session for forex traders.
One of the reasons why the London session is so important is because it overlaps with the Asian and New York sessions. This creates a period of high trading activity, as traders from different parts of the world are active in the market at the same time. The overlap between the London and New York sessions is particularly important, as these two sessions account for the majority of the trading volume in forex.
During the London session, traders focus on trading the major currency pairs, such as EUR/USD, GBP/USD, and USD/JPY. These currency pairs are the most actively traded in the forex market, and they account for the majority of the trading volume during the London session. Traders also pay close attention to economic news and data releases from the UK and the Eurozone, as these can have a significant impact on the currency markets.
Another reason why the London session is important is because of the high liquidity in the market. Liquidity refers to the ease with which traders can buy and sell currencies without affecting the price. The London session is characterized by high liquidity, which means that traders can enter and exit positions quickly and at competitive prices. This makes it easier for traders to execute their trading strategies and manage their risk effectively.
In conclusion, the London session is a crucial trading session in forex, and it is widely regarded as the most active and liquid trading session. It starts at 8:00 AM GMT and ends at 4:00 PM GMT, covering the hours of operation for the financial markets in London. During this time, traders focus on trading the major currency pairs and pay close attention to economic news and data releases from the UK and the Eurozone. The London session is characterized by high trading volumes, tight spreads, and high liquidity, making it a popular choice for forex traders around the world.
