Trading during the London session?
We all know that currencies can be traded at any time as the market is opened 24 hours 5 days a week, but even so, we need to know when is the best time to trade certain currencies and when is the best time to stay away from certain currencies.
It is common sense that in order to trade successfully, we must try to trade the currencies when the people of that specific country are awake because there is more liquidity.
The Forex market comprises of 4 trading sessions which open and close at different times, see Forex market hours HERE.
This session is the busiest of them all, it is the most traded and volatile session in the Fx market. London is the largest dealing centre in the whole world. The London session presents traders with more liquidity.
The moment the London session opens, the volatility in the markets increase and during this session, we (traders) often see price movements in some currency pairs. London session is also known as European session.
My own trades are mostly during the London session, but I also trade the New york session which overlaps with the London session . I do trade other sessions as well, especially during news flow that takes place during later sessions of the day.
Which currency pairs are mostly traded during London session?
- GBP pairs
- EUR pairs
- USD pairs
Gbp pairs in particular trade very well during London session because there is also a lot of NEWS FLOW AFFECTING GBP. When looking at economic calendars ( which is something very important to me) we can see mostly news that are specific to GBP are released at 4:30 am NY (10:30 am South African standard time) which is during London session.
I used to hate trading GBP pairs and now I realise I hated it because I traded it the most when I was still not paying attention to the daily economic calendar. My trades were always affected negatively by news, that has changed though.
GBP pairs are just fine and I trade them more often now even though their margin is a bit higher than most pairs, we are blessed in South Africa to have the most volatile session during our day time. Some traders from other countries have to actually wake up or stay up to catch the London session.
Some facts to consider
When Asian/Tokyo session opens, the companies in Japan are opened for business and will be buying and selling currencies in order to carry on with their day-to-day business deals.
This explains why we should trade the currencies when the people of that specific country are awake. This way, there will be high volume of Japanese Yen (JPY) exchange with the companies they do business with.
When Europe’s businesses are open for business, the EUR will be highly traded in high volumes, due to European businesses trading with companies from other countries.
In short, each session has its own currency pair that trades well in high volumes because of all the factors mentioned above.
Most traded currency pairs during the Asian/Tokyo session
- AUD/ AUSSI pairs
- NZD /KIWI pairs
- JPY /YEN pairs
The above mentioned currencies are mostly traded because they are domestic currencies of markets that are opened at that time. As the European session is near to closing , the volume is decreased and the volatility dies.
Another factor that lowers the volume/ liquidity is the UK and U.S bank holidays, when these two countries aren’t participating in the markets, the liquidity dies as they are the important players in the FX markets.
I also do not mind waking up sometimes to trade the Australian Dollar during the Asian/Tokyo session, the AUD news mostly happen during Asian session and when I really want to trade it. I wake up for it, as I have mentioned on my previous posts that waking up at night should be by choice and not because you are worried sick about your trades.
For more information on my private mentorship, read this post HERE This is my first post of 2016, thank you for stopping by and happy trading if you are trading already. Sharing is caring, kindly share this post, thank you.