London has always been a hub for trading due to its strategic location.
It is considered the forex capital of the world. For us forex traders, the London trading season is the perfect time for trading and finding opportunities.
The key is to choose the correct currency pairs if we truly want to reap the benefits of the London season.
Facts about London Trading Session
A magnanimous amount of forex trading occurs during this time.
This is why it is the most volatile session, with lower pip spreads than usual.
Most trading trends will initiate during this season and continue until the New York season starts.
There are much lower trading costs. Volatility dwindles as the middle of the London session hits.
When is the London Session?
As noted earlier, the London session for forex trading commences at 07:00 UK time.
A pre-session rush occurs at about 6 AM. This is where prices start to settle in the direction of the upcoming trend, and our currency pairs move into favorable positions.
07:00 to 10:00 is the time that consists of the most hustle-bustle. Then, currencies fly in, and we have a chance to trade at the best prices.
Hours between 10:00 to 12:00 mark the middle of the session, and so the volume starts to decrease.
This is because the New York market has begun to open its doors.
At noon the London market experiences one last surge as the US markets open.
The London session squeezes out most opportunities by 16:00 hours, and there is not much fruit waiting at this time.
What Forex Pairs Should We Trade?
We discussed the timings of the London session and some facts about each time slot and the session in general. But which pairs should we trade?
The high liquidity in this season allows us to trade almost any currency pair.
However, the ultimate pairs for us include GBP and EUR.
Examples of these include:
- EUR/USD
- GBP/CHF
- EUR/JPY
- GBP/USD
- EUR/CAD
- GBP/AUD
The markets in London open at 7 AM.
The volume increases tremendously, and so does the movement of price.
These surges happen before the London markets open to find the most suitable price to open.
During the London session, we should avoid pairs such as AUD and NZD.
There is a high chance for spreads to be high and opportunities to be even harder to find. Consolidation and unpredictable prices are also reasons to avoid AUD and NZD pairs during the entire session.
Is the London Session Worth it?
Absolutely!
A majority of profitable traders carry out their trading during this time.
This is because there is high liquidity, high volume, and numerous opportunities compared to the NY session. There is also a lot of buying and selling for us traders.
Bottom Line
Forty-three percent of forex transactions occur in London. Also called the European trading session, this is enormously beneficial to traders if they pick the right currency pairs.
