Introduction to the London Session
The London session is the third major trading session in the forex market, following the Sydney and Tokyo sessions. It typically starts at 8:00 AM GMT and ends at 5:00 PM GMT. The London session overlaps with both the Tokyo and New York sessions, resulting in increased trading activity and liquidity.
2. Major London Session Forex Pairs
During the London session, several currency pairs experience heightened trading volumes and price movements. Here are some of the major forex pairs that are actively traded during this session:
2.1 EUR/USD (Euro/US Dollar)
The EUR/USD pair is the most actively traded currency pair in the forex market. It represents the exchange rate between the euro, the currency of the European Union, and the US dollar, the currency of the United States. The London session accounts for a significant portion of the daily trading volume in this pair due to the involvement of both the euro and the US dollar.
2.2 GBP/USD (British Pound/US Dollar)
The GBP/USD pair, also known as cable, represents the exchange rate between the British pound sterling and the US dollar. The London session is particularly important for trading this pair since it involves the British pound, which is the currency of the United Kingdom. Traders closely monitor economic news and events related to the UK during this session, as they can have a significant impact on the pound’s value.
2.3 EUR/GBP (Euro/British Pound)
The EUR/GBP pair reflects the exchange rate between the euro and the British pound. It is considered a popular currency pair among traders during the London session due to the involvement of both the euro and the British pound. Economic data releases and political developments in the European Union and the United Kingdom can significantly influence this pair’s volatility and trading opportunities.
2.4 USD/CHF (US Dollar/Swiss Franc)
The USD/CHF pair represents the exchange rate between the US dollar and the Swiss franc. The London session is crucial for trading this pair since it overlaps with the European trading hours, including the Swiss market. The Swiss franc is often considered a safe-haven currency, and geopolitical events and market sentiment during the London session can impact its value against the US dollar.
2.5 EUR/JPY (Euro/Japanese Yen)
The EUR/JPY pair reflects the exchange rate between the euro and the Japanese yen. It is one of the most actively traded currency pairs during the London session due to the involvement of both the euro and the yen. Traders interested in trading the Japanese yen crosses often focus on this pair during the London session.
3. Trading Strategies for the London Session Forex Pairs
Trading the London session forex pairs requires understanding the characteristics of each currency pair and the factors that influence their movements. Here are a few strategies that traders often employ during this session:
3.1 Breakout Trading
Breakout trading involves identifying key support and resistance levels and entering trades when the price breaks out of these levels. Traders may look for breakouts during the London session when trading volumes and volatility are higher.
3.2 News Trading
News trading involves capitalizing on market volatility resulting from economic data releases, central bank announcements, and geopolitical events. Traders closely follow economic calendars and news sources during the London session to identify trading opportunities based on news-driven price movements.
3.3 Range Trading
Range trading involves identifying price ranges in which a currency pair is trading and executing trades when the price reaches the support or resistance levels of the range. Traders may employ range trading strategies during the London session when the market is not experiencing significant breakouts.
Conclusion
The London session is a crucial time for forex traders, offering high liquidity and volatility. Understanding the major forex pairs that are actively traded during this session can help traders identify trading opportunities and develop effective strategies. By focusing on the London session forex pairs, traders can take advantage of the increased trading activity and potentially enhance their trading performance.
