Traders have access to forex markets 24 hours a day on each weekday. Naturally, not all hours of the session see as much liquidity as others. Three core regional trading sessions have emerged on the global forex markets. These are New York, London and Tokyo sessions. What’s more, major sessions can overlap, which creates heightened liquidity on the market. In addition, there is a Pacific trading session which takes place in Sydney and Wellington. The Pacific session offers less liquidity.
London session definition
The London forex session starts at 7 am in summer and ends by 4pm GMT. This is when the European markets see the highest liquidity during the day. London and New York sessions can overlap towards the tail end of the London session, which presents solid opportunities for traders to profit from increased volatility and liquidity. The overlap occurs between 13.00 GMT and 16.00 GMT. Keep in mind that trading hours change during the winter and markets start with one hour delay.
Aside from the core sessions of New York, London and Tokyo, pacific sessions of Sydney and Wellington also attract a sizable amount of traders.
Why it is important for traders to understand the London session
- Regional sessions briefly overlap, which presents a window of opportunity for traders
- Not all trading hours have the same degree of volatility and/or liquidity
- Traders can place orders during the open of London trading session or wait for the trends to form and join later. The most activity happens during the London and New York sessions.
The London session in more detail
The London session in forex trading is the most active period for European traders. Approximately 43% of all forex trades take place during the London session. High liquidity is important for traders that are especially active during the overlapping periods between the London and New York sessions (fom 13.00 GMT to 16.00 GMT).
The expectation of higher liquidity attracts even more capital, providing tight spreads and ample opportunities for traders. The high volatility and active trading has made London the hub of forex trading.
London session example
The favorable market conditions during the London session attract traders from all over Europe. The most active forex pairs during the session are EUR/USD, GBP/USD, USD/CHF and USD/JPY, among others.
Market participants entering their trades towards the latter half of the London session are likely to see tighter spreads, as the New York session starts to overlap with the European markets.
This creates special windows of opportunity for traders to take advantage of the high degree of liquidity during those hours.
---
FAQs on the London session
What are the main forex trading sessions?
The main forex trading sessions are New York, London and Tokyo. This regional divide reflects the effect of different time zones on forex trading activity on the global markets.
A pacific session including Sydney and Wellington can also be traded, but it does not benefit from the same degree of liquidity as the London and New York sessions.
When does the London session start?
The London forex trading session coincides with the official London business hours. The session starts out at 7 am and concludes at 4 pm GMT. The ending hours of the London session overlaps with the starting hours of the New York session, which leads to heightened liquidity on the markets