For forex traders, the London trading session is the best session of the day. The liquidity is great, spreads are low, volume is high and opportunities are constantly evolving. However, if you’re looking at the wrong currency pairs you’ll be met with low volume, consolidation and pairs having no respect for price action. This is why picking your forex pairs is incredibly important. So, what forex pairs should you trade during the London session?
During the first few hours of the London session, the best pairs to trade will be GBP and EUR backed pairs. These will include EURUSD, GBPUSD, GBPCHF, GBPNZD, EURJPY and more. During the last few hours of the London session, the New York markets will open and USD pairs also become a great option. Let’s find out more…
Choosing The Best Forex Pair For The London Session
During the London session, the best forex pairs to be trading will be EUR and GBP pairs. These will include:
The reason these pairs are the best to trade, is purely down to the volume. As shown in the chart above, at 07:00 when the London markets open, there was a surge in volume and this caused a huge move in price action for the day. You can even capitalise on this during pre London hours, as price will usually move in a direction to find the best price for the open.
During the last 4 hours of the London session, you can also trade USD pairs such as USDJPY, USDCAD, AUDUSD and XAUUSD. During the whole London session, I would try to avoid AUD and NZD pairs as much as possible. This is because the volume will be lower, meaning spreads maybe higher, opportunities will be harder to find and the markets will be moving much slower, causing consolidation and unpredictable price action.
When Is The London Forex Session?
The London forex session starts at 07:00 UK Time. There is also a pre-London rush that takes place around 06:00 UK Time, where opportunities start shaping up for the day and currency pairs move into favourable positions for liquidity and great prices. During the first few hours, 07:00 until about 10:00, there will be a huge rush in volume as the bell goes and currencies will start flying. This is going to be the best time of the day to trade forex as price action is more likely to be respected.
Between 10:00 and 12:00 UK Time, there will be a bit of a lull where volume starts decreasing and the markets start setting up ready for the New York open. At 12:00, when US Markets open, there is another huge surge in trading volume and the London session comes back to life.
The end of the London session is at 16:00. By this time in the day, the majority of the good trading opportunities are done for the day and there isn’t much use in being in the markets. For intraday traders, this is a perfect time to liquidate and finish cash for the day.
Is The London Session Worth Trading?
The London session is very much worth trading and the majority of profitable forex traders are executing positions during this session. The volume is high, with a lot of buying and selling taking place. This means, in essence, there your spreads are going to be much smaller, there is going to be less consolidation and more ‘clean’ opportunities for you to capitalise on. If you’re interested in why the volume increases, Investopedia breaks this down perfectly.
This chart showcases the importance of the London trading session. Throughout the Asian session, the price of GBPUSD was slowly moving up to a key resistance level on the 30 Minute time frame. We were starting to consolidate in price around that area, due to a lack of volume and no real sellers stepping into the market. As soon as the market opened at 07:00, the market made a huge move to the downside, with no consolidation, moving down to the edge of the previous sessions range. This kind of move is extremely common during the London trading session and the forex markets certainly become a lot easier to understand when you come to grasps with session timings.
In Summary, What Forex Pairs Should You Trade During The London Session?
In conclusion, the best forex pairs to trade during the London session would be GBP and EUR pairs, as they will have the lowest spreads and highest volumes. This will include GBPUSD, EURUSD, EURGBP, GBPCHF, EURCHF and many more. During the last few hours of the session, adding in USD pairs will work too as the US Markets will now be open.
If you have any questions, queries or anything to add please do let me know in the comments down below!