Main Forex Trading Sessions

london session forex

The table below has information about some popular forex pairs and their average daily pip movement over a 12-month period starting November 2018 during the Tokyo session. In terms of the actual trading strategy, trading during the London market opening hour is no different than trading any other time of the day. However, given the significant increase in trading volume at this time, it makes breakout trading much more lucrative.

  • Typically, a forex pair has greater liquidity when at least one of its markets is open – USD/JPY will be busiest during the Asian or US sessions, but less so during the London or European session.
  • In EUR/USD, you can see that the range of this pair during Sunday is 69 pips.
  • Consequently, any person acting on it does so entirely at their own risk.
  • At the end of the New York trading session, when the daily trading ends, and the beginning of the Sydney session, when the daily trading begins, slow fluctuations are noticeable due to the decrease in trading volume.
  • The New York session starts from, 8 AM to 5 PM Eastern Daylight Time (EDT).

If you are a swing trader or a trend trader who likes to keep positions open overnight or several days at a time, then paying attention to the forex market hours chart in figure 2 may not be that important. However, most Forex traders are day traders and different trading sessions based on the time zone and geographic location of the financial centers around the world will have a substantial impact on the bottom line. The forex market is open 24 hours a day during weekdays, but this does not necessarily mean that you should trade forex assets at any time, or all day. Volatility varies during different times of the day because of different forex trading sessions.

London forex trading session trading strategies

Moreover, not all branches of a certain big bank will do these large-scale cross-border transactions. For example, a small branch of the Bank of America in Louisville, Kentucky. However, its downtown Manhattan branch in New York will certainly engage in large-scale foreign exchange deals. Similarly, a branch of the Swiss multinational investment bank, UBS Group AG, in Bangkok will have a lower transaction volume in the Forex market compared to its branch located in a major Asian financial hub like Singapore.

The London session experiences the majority of forex trading of the three main periods and is known for increased volatility and higher liquidity following a typically drowsy Tokyo session. London has long been the hub of forex, with 43% of all transactions happening in London. The final four hours of the London session experience the highest volume of trades due to its overlap with the New York session. Naturally, these are the busiest times during the trading day, because when two markets are open simultaneously, there is more trading volume, more volatility in symbols, and more profitable trading opportunities. It makes sense because, during those times, all traders in the market are trading, which means more money is moving. Moreover, this is also why the European session open is considered the most liquid and active trading session because a majority of the major currency pairs are traded during this time.

Understanding the Impact of Forex Market Hours in Your Trading Strategy

Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. Most short-term intraday traders decide to trade during the second half of the London session. Because during this time, two of the largest financial centers are operational, which increases liquidity in the market. High market liquidity is a pre-requisite of low spreads and short-term traders who only bag pips at a time need low spreads to reduce their cost of business.

An alternative may be trading during the hours that comprise the European/U.S. Session overlap, where volatility is still elevated, even though Japanese markets are offline. There are usually alternatives to trading in this session, and a trader should balance the need for favorable market conditions with outlying factors, such as physical well-being. If a market participant from the U.S. prefers to trade the active hours for GBP/JPY, they must wake up early in the morning to keep up with the market. There are many other notable countries that are present during this period, however, including China, Australia, New Zealand, and Russia.

How do trading hours affect individual forex pairs?

Considering how scattered these markets are, it makes sense that the beginning and end of the Asian session are stretched beyond the standard Tokyo hours. It is also important to remember that the forex market’s working hours change in March, April, October, and November because the countries’ time changes to summer time on different days. Also, the brokers usually inform changes in the forex working hours for any reason. Within these “gaps” in normal trading, currency values can still go up or down, so some traders have strategies for trading gaps to take advantage of this occurrence. Sudden price changes can occur during this time too, usually because of a major economic or environmental event that drastically influences the value of a currency.

What pairs move during London session?

  • GBP/USD.
  • EUR/USD.
  • EUR/JPY.
  • EUR/GBP.

For long-term or fundamental traders, trying to establish a position during a pair’s most active hours could lead to a poor entry price, a missed entry, or a trade that counters the strategy’s rules. In contrast, volatility is vital for short-term traders who do not hold a position overnight. A 24-hour forex market offers a considerable advantage for many institutional and individual traders because it guarantees liquidity and the opportunity to trade at any conceivable time.

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