Trading Forex During the London Session

With about 43% in daily trading volume, the London session is where most of the forex trading magic happens.

It is the busiest, most liquid, and most volatile of all forex sessions, with the New York session coming in next.

What makes the London session so special? And more importantly, is the London session right for you?

Let’s find out.

When is the London Session?

The London session operates during London’s business hours, which are from 7:30 AM to 3:30 PM GMT.

This session overlaps with the Asian sessions and New York sessions, which basically means more liquidity and huge price moves.

Now, you know why it is the most busy session!

The Tokyo-London overlap, which is from 7:30 AM to 9:00 AM GMT is usually when Asian traders are wrapping up and the European traders are taking over the market.

Things get a bit crazier in the afternoon during the New York-London overlap because two of the biggest forex markets are running at the same time.

As a result, the peak trading hours during the London session are from 12:00 PM to 4:00 PM GMT.

What Makes the London Session Such a Big Deal?

London is the heart of forex, at least in my opinion.

Traders, banks, and hedge funds from all over the world are selling and buying currencies nonstop.

This busyness ideally means that:

London Session is High in Liquidity

The increased market activity in this session is a result of more buyers and sellers willing to trade.

This also means tighter spreads and easier trade executions.

It is the Most Volatile

Of all trading sessions, the London session is the most volatile.

But why’s that?

The London session is high in volatility because:

• It Has a High Trading Volume

Thousands of forex traders, institutions, and banks tend to trade simultaneously.

• Major News Reports

The London session tends to see more major news reports and news from the UK and Europe at large, which often mean price fluctuations.

• The London-New York Overlap

The last few hours of the London trading session overlaps with the first few hours of the New York session. This overlap causes quick price movements and increased liquidity.

• It Is the Origin of Many Trading Patterns

Many trading trends pick up from the London session and even continue into subsequent sessions. See successful day trading patterns for examples.

The Best Currency Pairs to Trade During the London Session

Not all fingers are equal and so are the currency pairs in forex trading.

Some pairs experience tighter spreads and smoother price movements, while some are…

Well, let’s say chaotic.

Best Major Currency Pairs

These pairs are great for smaller spreads and liquidity.

• EUR/USD

I like to call this pair the royalty of forex. They are super liquid and have the tightest spreads within the London session.

• GBP/USD

This pair is a perfect fit for traders who are in for a ride and like some volatility, as it moves around a lot.

• USD/JPY

This currency pair is a rock solid choice for traders who like a bit of steadiness, as its price movement is less volatile.

• USD/CHF

Unlike its counterparts, the USD/CHF pair is the least volatile and liquid option, but remains a good investment.

Best Cross Pairs

These pairs offer great trading opportunities beyond the majors, often with unique volatility and trends.

• EUR/JPY

This pair has big price movements and is great for trend trading.

• GBP/JPY

The GBP/JPY pair is has such big moves that it has been nicknamed “the beast”.

• EUR/GBP

If your preference is slow and steady price changes, you might want to look into this pair.

Don’t invest in these pairs without understanding how they work in the market.

My suggestions will always be to:

• Stick to the majors if you’re a new trader.
• Try the cross pairs if you love volatility and know your way around it.

How Many Pips Should You Expect With Each Currency Pair?

Have you ever thought about how much movement a current pair moves during the London session?

Here’s some past data to show you:

These numbers tend to change due to fluctuating market conditions.

Trading Strategies for the London Session

It’d be a bad idea to go into the most volatile and liquid session in the forex market without a clear trading strategy.

Here are three solid strategies to get you started:

London Breakout Strategy

The key here is to identify significant support and resistance levels from the Asian session.

Then, wait for a breakout in either direction when the London session opens.

Ride the wave to gain a quick profit.

Scalping Strategy

When scalping during the London session:

• Trade pairs that are high in liquidity like EUR/USD or GBP/USD.
• Look for quick price movements. 5-15 pips is a good range.
• Go in, go out, quickly. Repeat.

Trend-Following Strategy

Strong trading trends often form in the first few hours of the London session. Look out for these trends.

Use moving averages or MACD to confirm these trends, then jump in and ride the wave until the momentum slows down.

Is the London Session What You Need?

The London session is a great trading fit for you if you:

• Enjoy markets that move quickly with plenty of trading opportunities.
• Trade between European or U.S. business hours.
• Can handle quick decision making and volatility.

Who’s the London Session Not For?

The London session is not for traders who:

• Like slow and steady market action.
• Don’t react quickly to economic news and market changes.
• Can’t trade during European or U.S. business hours.

Rounding Up

If you’re serious about forex trading in high liquidity and volatility markets, the London session may just be for you.

It is riddled with:

• Tight spreads
• High trading volume
• Increased liquidity
• Plenty of volatility

The key to trading the London session is to find a strategy that works for you.