European Forex trading session is the one which offers highest amount of trading volume. London alone offers 36.7 percent trading volume which is equivalent to trading volume of New York and Tokyo together. Other important cities in Europe with active trading sessions are Amsterdam, Frankfurt and Milan. European forex trading session is also one of the most volatile sessions when compared to trading sessions in Asia and America. Let’s have a look at various features that not only make trading sessions in the Europe massive and volatile but also capable of affecting sessions in other parts of the globe.
It is very important to understand that the hour in which the European traders are entering the Forex market is the hour in which traders in Tokyo are exiting the market. This overlapping hour not only make EUR/YEN pair volatile but also offers broad bid/ask spectrum to the traders. You can see volatile activity of Japanese Yen in relation to Euro of Europe.
Similarly exiting hour of European traders again overlap with entry hour of American traders resulting in same volatility in EUR/USD currency pair. Seasoned traders get lot of opportunities for booking profits in these overlapping hours.
London has earned a reputation of being financial center of the world. Thus liquidity of currencies is maximum during European forex trading session. It promotes compatibility with almost every currency of the world. It is the best time to buy or sell currency at the desired price without worrying about availability and volume of trade.
Number of trading participants and volume of trade is highest during the European trading session. It is but obvious that movement of prices and opportunity to earn from price fluctuation will also be highest during European trading session. Though you will get n number of opportunities to earn but it is nothing less than a double edged sword. Risk involved is also the highest during this session. You have to calculate your moves and play wisely to turn an opportunity in to real profit giving trade.
One of the most interesting fact is that countries like Switzerland, United Kingdom, Germany and other member countries release macroeconomic data during the trading sessions. This data play a very crucial role in determining the movement of the currency pairs. People show lot of interest in trading with currency pairs such asEUR/USD, GBP/USD, USD/CHF, EUR/GBP, USD/JPY. High liquidity and overlapping trading hours further influence the traders to make more and more investments. These currency pairs also have the narrowest bid/ask price as compared to other currency pairs which further influence the investors to invest in them.
Lunch hour of London trading session is quite famous mainly due to the fact that at this hour brokers and traders have lunch together and gear up for a high volume trading as the session resumes.