From the time the Asian market or Tokyo market starts to close the shop, the European market known as the London session is just starting their day.
Market participants keep their eyes on London session in spite of the other financial centers all around the Europe.
Even before, London has always been at the center of every trade, this is because of their strategical location. Due to its strategic location, London has been considered to be the forex capital of the world with thousands of businessmen trade every single minute. During the London session, about 30% of all the foreign exchange transactions happen.
Look at the table below. It shows the London session ranges of the major currency pairs.
The values above were calculated using averages if past data from the month of May 2012. Depending on liquidity and other market conditions, these values may vary. Thus, considered to be not absolute values. If you are going back to the table, you will notice that the session range for EUR/CHF has not been included since the Swiss currency Franc has been nailed to the Euro at 1.2000 during that time.
Hear are some of the conceptions about the European session or London session:
1. London session crosses with the two other major trading session. London session is also the key financial center in Europe. A lot of forex transactions take place during this period. With this kind of situation, high liquidity and potential lower transaction costs are expected.
2. London trading session is considered to be the most volatile session due to the large amount of transactions that take place.
3. During the London session, most of the trends begin and continue until the New York session starts.
4. At lunch time, volatility tends to slow down during the middle of the London session because traders go on break while waiting for the New York session to start.
5. Trends can sometimes reverse at the end of the London session, as European traders may decide to lock in profits.
Which Pair Should You Trade during London Session?
During the London session, there is so much liquidity that any pair can be traded. This is due to the volume of transactions that take place.
It is best to stick with the major currency pairs such as EUR/USD, GBP/USD, USD/JPY, and USD/CHF. These currency pairs normally have the tightest spreads.
Also, it is these pairs that are normally directly influenced by any news reports that come out during the European session.
Yen crosses are also a good choice. These currency pairs EUR/JPY and GBP/JPY are pretty volatile during this time. However, you have to bear in mind that cross pairs may cause spreads to be a little wider.
That’s all about the London Session. It’s now time to learn the New York session.
Proceed to the next lesson: New York Session
Go back to the previous lesson: Tokyo Sesssion
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