The London trading session accounts for around 35% of total average forex turnover, the most important amount relative to its peers. The London forex session also overlaps with the New York session throughout the year.
The slower Tokyo market will lead into the London session, and as prices begin to maneuver from liquidity providers based within the UK , traders can usually see increases in volatility.
As prices begin to return in from London, the ‘average hourly move’ on many of the main currency pairs will often increase.
The ‘overlap’ is when the London and the US sessions literally overlap one another (8AM ET to 12PM ET). These are the 2 largest market centers within the world, and through this four-hour period large and fast moves are often seen during the overlap as an outsized amount of liquidity enters the market.
The London forex session is one among the foremost liquid trading sessions. Due to the high volume of shopping for and selling, major currency pairs can trade at extremely low spreads. Day traders looking to focus on short moves could also be curious about finding trends and breakouts to trade so on reduce the value they pay in spreads.
There are not any ‘best’ currency pairs to trade during London forex market hours, but there are currency pairs which will reduce in spread thanks to the high volume and permit traders cheaper spread costs.
These currencies include the main currency pairs like EUR/USD, USD/JPY, GBP/USD, and USD/CHF. The major currency pairs trade extremely high volumes during the London forex session.
Currency pairs that are most affected by the overlap include the EUR/USD, USD/JPY, GBP/USD due to the inter-bank activities between the United States and Europe/London. If your trading strategy is best fitted to volatility, then these are the trading pairs to observe because they’re going to be flooded with liquidity and can move more on average during the overlap.