The London session — why it is the deepest market of the day

For his first few months trading, Tomek only opened his platform in the evening, after his software job was done. He kept wondering why his trades went nowhere while costs quietly ate his small gains. One day, out of curiosity, he switched the screen on at nine in the morning and found a different market: EUR/USD moved more in a quarter of an hour than it had through the entire previous evening. That is how he discovered the London session — the deepest and busiest stretch of the trading day in currencies.

Why London is the biggest currency market

The currency market runs around the clock on working days, but trading is not spread evenly across those hours. Liquidity travels with the sun: Asia wakes first, then Europe joins in, and in the afternoon North America comes online. Among these centres one has led the field for decades — London.

The scale of that lead is striking. The 2022 survey by the Bank for International Settlements (BIS) shows that around 38 percent of global currency turnover passes through desks in the United Kingdom. By comparison, the United States accounts for roughly 19 percent, Singapore for about 9 percent, Hong Kong for 7 percent, Switzerland for 5 percent and Japan for a little over 4 percent. In other words, one financial centre handles a larger share of global currency trading than New York, Singapore and Tokyo combined.

That dominance did not appear out of nowhere. It rests on a convenient time zone that overlaps both the tail of the Asian session and the start of the American one, on the long history of the City of London as a financial hub, and on the concentration of the largest banks, which keep their main currency desks there. The result is that during London hours the market holds the deepest pool of capital on both sides.

Session hours and why they drift

By convention the London session runs from 08:00 to 17:00 London time. For someone in continental Europe that means, for most of the year, roughly 09:00 to 18:00 local time. That "roughly" matters: the United Kingdom and the euro area change their clocks on slightly different dates than parts of the rest of the world, so for a few weeks each year the whole window shifts by an hour.

For that reason, rather than memorising a fixed clock time, it is better to learn to recognise the session by how the market behaves. When European desks start work, liquidity and volatility rise visibly — you can see it plainly on a EUR/USD or GBP/USD chart. The simplest approach is to keep a clock showing London time next to your platform and to watch how the first European morning hour changes the rhythm of the quotes.

The deepest pairs of the London hours

During London hours, most of the action gathers around pairs in which one of the currencies is the euro or the pound. Three of them stand out from the rest.

For anyone just starting out, EUR/USD and GBP/USD are the natural choice. They carry the tightest spreads during the heaviest trading and usually the most orderly moves, so they are an easier place to learn to read a chart before reaching for pairs with greater volatility.

Why the open can accelerate so sharply

Through the European night the market usually drifts in a narrow range. Trading is dominated by Asia, while the largest players in Europe and the United States are asleep, so price moves sluggishly. When desks in London and Frankfurt come online in the morning, the picture changes within minutes.

A wave of orders that had been waiting for liquidity then hits the market: corporate flow being executed, funds setting positions, and reactions to the macroeconomic data released early in Europe and the United Kingdom. That sudden change in market depth lets price leave the overnight range quickly and set a direction for the first part of the day. The first hour or two after the session starts is one of the most volatile windows of the whole day.

From an observer's point of view it looks like a sudden burst of speed, but in reality it is simply the moment when most of the capital enters the game. It is worth keeping the other side of that coin in mind: more volatility also means more risk, because the move can be violent in either direction.

„London is still the heart of the global currency market, and it is its session that sets the tone for the whole trading day." — Kathy Lien, Day Trading and Swing Trading the Currency Market, Wiley, 2016.

The overlap with New York and the 16:00 fix

The second key window arrives in the afternoon. When it is roughly between 13:00 and 16:00 London time, trading in London is still going on while the American session opens. Those few hours, in which both sides of the Atlantic trade at once, are the moment of deepest liquidity in the day. Spreads are usually at their tightest and moves at their most decisive, because capital from both Europe and the United States is in the market. You can read more about how the New York session works in a separate article.

Right at the end of the London day, at 16:00 local time, there is one more important point — the WM/Reuters currency fix. This is the moment when a reference rate is set that funds, banks and companies use to value portfolios and settle transactions. A large stream of institutional orders concentrates around this window, which can move the rate noticeably. We describe how that works in the piece on the 16:00 London fix.

It is also worth remembering that London hours are not only about the overlap with America. In the morning they briefly overlap with the tail of Asian trading — we devoted a separate article to that handover in the text on the Tokyo and London overlap.

What to do tomorrow

1. Put a London-time clock next to your platform. Add a second time zone for London on your computer or phone so you always know when the session opens and when the overlap with New York is approaching. That will stop you confusing the hours around clock changes and keep you from missing the deepest windows of the day.
2. Compare the morning with the evening on the chart. Open EUR/USD on a fifteen-minute timeframe and look at the candles from the first two hours of the London session and from the late European evening. Roughly count how far price moved in each window. You will see for yourself where the game is actually played.
3. Check spreads at different times. Note the spread on EUR/USD and GBP/USD at three moments: in the morning at the open, in the afternoon during the overlap, and late in the evening. That will show you in black and white how much it costs to enter the market outside London hours.
4. Plan trading around your day, not the other way round. If you have a day job, prepare a scenario in the evening and set pending orders at chosen levels instead of chasing the market on the fly. Let the London session execute the plan for you while you are at work.