London. The heart of Britain. A global financial hub. This city is famous for being a giant of commerce - and football. And also James Bond.
In the foreign exchange market, the London trading session refers to the period between 7am – 4pm GMT. It overlaps with the closing hours of the Tokyo session and the opening hours of the New York session.
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London Trading Session 101
When does the London session open?
The London session begins at 7am GMT. That would be 2am New York local time. For the continent of Africa, that would be 8am local time in Nigeria, 10am local time in Kenya and 9am in the nation of South Africa.
What pairs should I trade during the London Session?
The ideal forex pairs to be traded during this session are EUR and GBP pairs. The London session is sometimes called the European Session. This is because the session takes place during business hours in the continent of Europe.
The British Pound and the Euro are the most important currencies in this region, hence the high volume of trading them during this session.
Trading activity is at optimum from 7am to 10am GMT - this time frame is key for finding good trade entries.
How do I trade the London Session?
The opening hours of this session generally have the highest probability of creating either the high or the low of the day. When the market outlook is bullish for a particular trading pair, the low of the day is likely to be formed during the London session. On the other hand, when we have a bearish outlook, the high of the day tends to be formed during the London session.
EURUSD Chart source: Tradingview.com
The above picture is a chart of EURUSD showing price movement from the 20th of October 2020 to the 27th. A key thing to note here is that the high and low of the day are picked with respect to 00:00am New York time each day. This is because the Interbank Price delivery Algorithm resets at 00:00hrs New York time.
On the 20th of October, the low of the day was formed at 1.1760 and then the market traded higher for the day. This occurred at 8am London time.
On the 22nd of October, the high of the day was formed at 1.1867 after which the market dropped throughout the day. The time of occurrence is 8am London time.
On the 23rd of October, price bottoms at 1.1791 and never looked lower for the next 24hours. The time is 7am London time.
October 26th saw price top at 1.1847 for the day. This occurred at 8am London time.
The Price action during the London session has the highest probability of a large directional move within a trading day. This session also has the highest number of trading order executions.
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Which trading sessions overlap with the London session?
The Tokyo session overlaps with the London session during the summer between 3-4am EST, which would be 8-9am GMT. This means the first hour of the London session takes place the same time as the final hour of the Tokyo/Asian session.
One hand in the air for the big city! The New York session overlaps London between 8am – 12pm New York Time (EST). In the continent of Africa, this would be 1pm to 5pm Nigerian time, 2pm – 6pm South African time, and 3pm – 7pm Kenyan time.
Want to learn more about forex market opening and closing times? Look no further! Read What Time Does the Forex Market Open? here.