i. Also known as London trading session.
ii. European trading session begins at 7 am UTC and closes at 4 pm UTC.
iii. Currency pairs including EUR, GBP, as well as USD are very active during this session.
What is the European trading session?
The forex market is a place where foreign currencies are traded and this market is open 24 hours a day for market participants to buy and sell currency pairs.
If the market is open the entire day it does not mean that trading happens at the same volume and intensity throughout the day.
There are a couple of sessions that are nothing but time periods in the day when a lot of action starts to happen in the forex market.
One such session is the European trading session which starts at 7 am UTC and closes at 4 pm UTC.
It is during this time that the major banks and other financial institutions get in their offices and look to carry out their activities in the forex market.
The European trading session is also referred to as the London trading session as London is the major financial city in Europe.
Currency pairs to trade in the European session
The European session is a very sought-after trading session by forex traders. Just after the Asian trading session is over and once the European session begins, volatility and liquidity start to pick up.
It is estimated that almost 43% of the daily transactions that take place in the forex market happens in the European session. For this reason, the European session is considered to be the most volatile forex trading session.
Now, since there is an influx of liquidity and volatility, traders can trade every currency pair with ease and can ensure the lowest spreads.
You could stick to the major currency pairs i.e. all the currency pairs that are paired with the US Dollar. These include GBPUSD, EURUSD, USDCAD, etc.
You can also look to trade currency pairs that are paired with the EUR and GBP as all the news reports and various happenings in the European trading session will affect these pairs.
These would include minor currency pairs such as GBPEUR, GBPJPY, EURJPY, etc.
The European trading session is my personal favorite and I am always active during these hours to capitalize on any trade opportunity that may arise.
One thing that I have noticed during this particular trading session is that most trends start during this session in pairs like EURUSD, EURGBP, GBPUSD, and GBPJPY.
If you are someone who day trades then I would suggest that you focus on these currency pairs and jump in whenever the opportunity arises.
Who should trade in the European session?
I hope that by now you will have understood the European trading session and also know the currency pairs that you should track during those hours.
Moving on, the European trading session is the time when the traders living in the European region get to work. During this time traders in the US might still be asleep.
This brings us to the part of who should trade in the European trading session. If you are someone living in Europe then could probably look to trade during the European trading sessions.
Even if you are someone living in a region other than Europe but are wide awake, then you could too trade in the European trading session.
In the last hour of the European trading session, there is an overlap in timings with the opening of the American trading session and this is where lots of traders from the American region look to join the trading activities.
Now, does it mean that if you are awake then only you can trade in the European trading sessions? Absolutely no.
You can always set limit orders at any particular price level and walk away or maybe go to sleep and your order can get filled during the European trading session.
Trading strategies that you can use in the European session
I am sure you know that there are numerous currency pairs that are listed on the forex market and there are dozens of trading strategies out there that traders may use to capitalize on the price swings of these currency pairs.
So, there is no thumb rule that one particular strategy will work on the currency pairs if you trade the European trading session. The key is to use a strategy that you are comfortable with and use it right.
What I normally do is, I use moving averages to find continuation entries on small trends which are formed during this trading session and I also use demand and supply zones that work wonders too.
Moving averages ensure that I am able to find trends and that I am not going against the trend and the demand and supply zones allow me to know where the value areas are.
You can also use other technical analysis strategies like chart patterns, candlestick patterns, and other technical indicators.
Fundamental analysis also can be used to trade during the European trading session as a lot of things happen during those hours that can influence the prices of the currency pairs.
Instead of choosing any random strategy, applying it, and taking trades straight away, I would sincerely suggest you test different strategies on different currency pairs and then see what works best.
You need to have a proper trade plan with specific rules that will dictate your trading process and most importantly, you should practice proper risk management at all times.
Which session do you trade in?
Do let me which forex trading session do you normally trade in if you have any preference as such.
I’d also like to know what strategies you make use of while you trade in the various forex trading sessions. Do let me know in the comments section below.
Share this blog post with other traders and let them also understand the European trading session.
You can always ask questions or queries in the comments section and I will get back to it for sure.