London Trading Session – Kill zones and Macros

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One of the most interesting things about forex market is that it operates 24 hours a day. This is because forex market is global in nature and decentralized. Forex market operates with different financial centers opening and closing at various times. Among these times, London session is one of the influential timeframes within forex market. Traders often find high-probability trading opportunities during these time windows.

This article explores understanding and essentials of London trading session, and strategies used by smart money traders in trading London Session.

Overview of the London Trading Session

London trading session is also known as European trading session. London Session starts before the closing of Asian Session. This ensures continuous activity in the forex market. In Europe, London market is the heart of the European trading session. This makes it the most impactful trading hub in the market. Institutional market participants from different European financial centers, such as Frankfurt, Paris, and Zurich, also contribute to the market’s volatility.

The London Trading Session officially starts from 8:00 AM to 5:00 PM GMT.  According to Michael J. Huddleston, we need to look sessions and kill zones in New York time. In EST, the London Session starts at 2:00 AM and ends at 11:00 AM.

London session is less volatile than New York Trading session. However, there is a high participation of traders and financial institutions during this session results in increased liquidity and price volatility. This makes it a prime time for traders to execute their high-probability trades.

Characteristics of London Session

London Trading Session has high volatility and liquidity. In trading liquidity refers to the availability of buy and sell orders. This is because of the presence of institutional traders, hedge funds and banks. London session accounts for about 30 % of the daily forex trading volume. Traders can execute large orders with minimal slippage and makes this session ideal for scalping and day trading.

In London Session, market experience a strong price movements and trends. This indicates high volatility in market. Price action during London session often breakouts of the Asian trading session range and creates new highs and lows. This session often determines the direction for the rest of the day.

Economic releases from Europe, especially from England, tend to create sharp price movements during the session. Key economic reports include GDP, Inflation, trade balance, CPI and ECB, employment data, and BOE interest rate decisions. These reports often result in immediate price reaction.

Overlapping Session is the most important part of London session. London trading session overlaps with both the Asian and New York Sessions. The overlapping time is the most volatile part of market. Smart money traders often find high-probability trade entries. Asian Session overlap occurs at 02:00 AM to 4:00 AM EST. On the other hand, New York Session Overlap occurs at 8:00 AM to 11:00 AM EST.

Major Currency Pairs

It is important to note that not all forex pair or indices reacts in London session. Forex pairs and indices that have some sort of relation with Europe are recommended to trade in London trading session.

EUR/USD and GBP/USD often experience sharp moves especially in UK-Specific data releases. There is high liquidity and volatility that results in trendy price movements.

Other pairs like EUR/JPY, GBP/JPY. USD/CHF, and EUR/CHF show significant volatility and popular among day traders. Swiss Franc reacts to European Market movement.

London Kill zone: Liquidity and Manipulation

In Inner Circle Trader’s framework, London killzone is a critical time window within the European session. London Killzone starts at 2:00 AM and ends at 5:00 AM EST. In this time window, we primarily focus on liquidity grabs, stop hunts, and market manipulation.

Liquidity Manipulation

The London Killzone is known for liquidity sweeps and price manipulations. Market makers and institutional players utilize this time to sweep liquidity before setting the main trend.

Liquidity manipulation takes place in the form of stop hunts around Asian Session highs and lows. This price movement triggers stop-loss orders. This results in a liquidity grab before the true market direction in established.

Secondly, liquidity manipulation takes place in the form of fake breakouts. Fake break out often trick retail traders. After sweeping liquidity, price moves in the opposite direction.

London Macros: A Comprehensive Guide

London Macros refers to short intervals within the trading session. These specific times are crucial for traders aiming to align their trades with algorithmic price movements and capitalize on market volatility.

London Macro Timing

London Macro times occur within the London Session Killzone. This period of time is known for liquidity grabs and market reversals. The following are the timings of London Macros:

  • London Macro 1: 02:33 AM – 03:00 AM EST.
  • London Macro 2: 04:03 AM – 04:30 AM EST.

Importance of London Macros

In these time windows, market sweeps liquidity in to form of buy-side liquidity and sell-side liquidity. This liquidity seeking behavior is important in London trading session.

In these time windows, price frequently moves to fill inefficiencies like Fair Value Gaps left by previous impulsive moves. Since macro time windows typically last for 30 minutes, traders can use them for high-probability trades on lower timeframes.

Key Concepts for Trading London Macros

To effectively trade London Macros, traders need to identify imbalances, liquidity zones, and short-term price direction.

It is important to analyze impulse price swing for Fair Value Gaps before a macro begins. Relevant timeframes for trading are 15-min, 5-min and 1-min. You can align your timeframes accordingly for analysis and for trade entries. FVG above price act as potential resistance zone. Price may move to fill inefficiencies before reversing. FVG below price serve as support zone. Price might drop to rebalance before resuming movement.

Liquidity zones are areas on price chart where a large number of pending orders and stop-loss reside. Buy-side liquidity contains stop orders above a previous swing high. Sell-side liquidity contains stop orders below previous swing lows.

Lastly, it is crucial to monitor price behavior during London Macros. Macros trading is scalping-based. It does not require overall higher timeframe directional bias but rather short-term movements within the macro windows. If price takes sell side liquidity first, expect a reversal upward towards buy-side liquidity or an unfilled FVG. On the other hand, if price takes buy-side liquidity first, expect a drop downward towards sell-side liquidity or an unfilled FVG.

Trading with London Macros provides a powerful edge for scalpers who understand liquidity sweeps, FVG, and algorithmic price movements. By aligning trades with macro timing and following a structured liquidity-based approach, traders can capitalize on predictable price movements.

Final Note

London trading session is highly volatile with huge liquidity. London Killzone and Macros occurs inside London session. Mostly trading techniques and strategies are employed in London session for high-probability trading. Traders must exercise discipline, test strategies on previous price action, and use proper risk management to protect capital. Forex trading involves huge risk and cannot be considered as suitable for all investors. Past price can help us in understanding price behavior but does not guarantee future results. Always trade with the capital that you can afford to lose. Seek professional’s advice before engaging in high-risk trading strategies.

FAQs

What is the London Session in Forex Trading?

In trading, London Session refers to the forex market activity during the London trading hours. In New York Timing, London Session typically starts from 2:00 AM and ends at 11:00 AM EST. Within the trading session, high peak of liquidity and volatility is recorded between 2:00 AM to 5:00 AM. This session is known for high volatility, liquidity sweep, and significant price movements.

Why is the London Session important for Forex Traders?

There are multiple reasons for the importance of London Session. Firstly, it accounts for over 30% of daily forex trading volume. Major currency pairs are EUR/USD, GBP/USD, and GBP/JPY. Lastly, this session overlaps with the Asian session’s closing and New York session’s opening.

Can beginners trade the ICT London session?

Beginners should first understand ICT market structure concepts (liquidity, Fair Value Gaps, BOS, CHOCH) before trading live. Back testing ICT strategies is highly recommended.

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