What is the London Rush?
In forex trading, the London Rush occurs in the first two hours of trading after the opening of the London market, which occurs at 8 am London time or 3 am EST. Since trading on the London market overlaps with trading on the Tokyo market for one hour, forex traders can calculate trends by watching how the market is moving for the day.
If the Tokyo exchange, which is the lowest forex trading market among the big three: London, New York and Tokyo, has little volatility and the London market breaks out during the first few hours of the London trading rush, a trader can speculate with some assurance that the market is changing and get in on the action.
It is during that open range breakout that a trader must be on his toes. Since the London trading market is the largest among the big three and since the most volatility occurs in the first few hours of trading, it is imperative that forex traders start their day a little before 3 am EST in order to have a firm grip on trading trends for the day.
Rapid acceleration occurs once the Tokyo market shuts down and the London market opens. It is during this period that traders, once they have set a stop loss, get into the action. When this short window opens, pips rise or fall rapidly, and a trader must keep a watchful eye on his investments.
So by watching for possible break outs on the Tokyo market and the movement of the London market in the first few hours of trade, a trader can calculate his trading strategy for the day. If the market spikes dramatically in the first few hours of trading in London, a trader has a great opportunity to get onboard.
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