When Is The Right Time To Trade Forex: London Session

As traders in the Asian Market start packing up for the day, their counterparts in Europe are just starting off.

Of course, there are other financial centres spread across Europe, but it’s the London market that most traders keep their eyes on.

History has always favoured London as the centre of European trade, and the inhabitants thereof can thank the stars for its strategic location.

So it is not much of a surprise that London is regarded as the world’s forex capital with thousands of participants and businesspeople performing transactions on a large scale every minute of the day. Not less than 30% of the world’s forex transactions occur during the active hours of the London session.

Below is a tabular representation of major currency pairs and their pip ranges during the London session.

The calculation of the above pip values was arrived at by using averages of previous data. Do not forget that the values as mentioned above are not absolute, and can vary in line with changes in liquidity and other related market conditions.

Additionally, the session level for EUR/CHF is not included in the above-mentioned values, because during the period, the Swiss franc has been pegged at 1.2000 to the euro.

You think you know something about the London session? Here are some accurate facts you should know as well.

Facts about the London Forex session

  • During the active period of the London session, a large volume of transactions takes place, due to the fact that London is strategically located as a financial hub centre. Another reason is that the London session also crosses with the remaining two other major trading sessions—all of which leads to a high level of liquidity with the potential to lower pip spreads, i.e., transaction cost.
  • Owing to the large volume of transactions that occurs, the London session is primarily the most volatile of all the major trading sessions.
  • Majority of trends starts during the active hours of the London session, and they will typically continue until the starting of the New York session.   
  • A decrease in volatility is bound to happen in the middle of the session, as participants occasionally go off to have lunch before deciding to wait for the commencement of the New York session.
  • Sometimes, trends can take a backward turn at the end of the London trading session, if traders in Europe decide to lock in profit.

Which of the pairs should you trade?  

Due to the large proportion of transaction that occurs, the European session has so much liquidity that virtually makes almost all pairs tradable.

Yes, it is always best to stick with major currency pairs such as GBP/USD, EUR/USD, USD/CHF and USD/JPY, because these are usually the pairs having the tightest spreads.

Furthermore these are the pairs that are usually influenced directly by any news report that comes into the open during the European session.

Trying the yen crosses (especially on GBP/JPY and EUR/JPY) is another thing you can do, as such are pretty much volatile during this period. However, since they are cross pairs, it is likely that the spread might be a bit wider though.

Alright! Our next topic will focus on the New York session, the paradise where even beggars can become choosers in a unique world where fantasies are made to become realities.

Let’s ride.

  • BrokerEUR/USD
    SpreadEX 0.6pips (variable) margin: 3.33%
    IG 0.6pips (fixed) margin: 3.33%
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