Lecture 11: SMC Strategy For The London Session

Introduction

The London session is one of the most important trading sessions in the forex market. It sees the highest liquidity, the most significant price movements, and major institutional activity. Smart Money traders (SMC traders) need to understand how institutions operate during this session to take advantage of high-probability trade setups.

This lecture will cover:

1. Why the London Session is important for SMC traders
2. Session bias – How to determine market direction
3. Key time windows – When major moves happen
4. How to apply SMC strategies during the session
5. Examples of high-probability setups

1. Why the London Session is Important for SMC Traders

The London session (8:00 AM – 4:00 PM London time) is when European banks and institutions dominate the market. This session overlaps with the Asian session in the first few hours and with the New York session towards the end.

Key characteristics of the London session:

• High liquidity – Large trading volume creates strong price movements.
• Institutional activity – Banks and hedge funds execute orders, influencing price action.
• Breakout potential – Often, the real direction of the day is set in this session.
• Strong reversals – Price frequently moves to trap retail traders before shifting direction.

For SMC traders, this session presents excellent opportunities to trade using Order Blocks (OBs), Fair Value Gaps (FVGs), and liquidity grabs.

2. Understanding Session Bias – Identifying Market Direction

Before trading the London session, traders must determine the session bias—whether institutions are likely to drive price bullish or bearish.

How to Identify Session Bias:

1. Check the Previous Day’s Market Structure
   • If the market is in an uptrend, look for a bullish continuation or a liquidity grab before moving higher.
   • If the market was in a downtrend, expect a bearish continuation or a pullback before selling off again.
2. Study the Asian Session Range
   • The Asian session (Tokyo session) typically consolidates, forming a tight range.
   • London often breaks this range, trapping traders before revealing its true direction.
   • If the price sweeps Asian lows, it often reverses upward. If it sweeps Asian highs, a bearish move may follow.
3. Look for Liquidity Pools
   • Institutions target liquidity zones before making major moves.
   • If there are equal highs or lows near the London open, Smart Money is likely to sweep them before reversing.
4. Check Higher Timeframe Bias
   • Use the 4H and 1H charts to see where Smart Money is positioned.
   • Identify Order Blocks (OBs) and Fair Value Gaps (FVGs) that institutions might use to enter trades.

3. Key Time Windows for the London Session

The London session is not equally volatile throughout the day. Certain time windows are more important for Smart Money moves.

Major Time Windows in the London Session:

1. London Open Kill Zone (7:00 AM – 9:30 AM London time)
   • The most volatile period is when Smart Money executes large orders.
   • Expect liquidity sweeps, stop hunts, and market structure shifts.
   • This is the best time for breakout trades and reversals.
2. Mid-London Session (10:00 AM – 12:00 PM London time)
   • Price often consolidates or makes a pullback after the initial move.
   • Traders should look for retracements to Order Blocks (OBs) or Fair Value Gaps (FVGs) for re-entries.
3. London Close (3:00 PM – 4:00 PM London time)
   • The market slows down as European traders close positions.
   • Expect profit-taking moves and possible reversals.

4. How to Apply SMC Strategies in the London Session

To trade the London session effectively, traders must align with Smart Money movements. Here’s a step-by-step approach:

Step 1: Mark the Asian Range and Identify Liquidity

• Draw the Asian session high and low before London opens.
• Identify equal highs, equal lows, and stop-hunting areas.

Step 2: Identify Key Smart Money Levels

• Look for Order Blocks (OBs), Fair Value Gaps (FVGs), and Breaker Blocks from the previous session.
• Use the 4H and 1H charts to confirm higher timeframe bias.

Step 3: Wait for a Liquidity Sweep at London Open

• If price sweeps liquidity at the open, Smart Money may be preparing for a reversal.
• If the price breaks structure (BOS) after the sweep, enter in the direction of the move.

Step 4: Enter Using an SMC Entry Model

• Risk Entry: Place a limit order at an OB before the price arrives.
• Confirmation Entry: Wait for the price to break structure (BOS) before entering.

Step 5: Manage the Trade Efficiently

• Set a stop-loss below the OB for buys, and above the OB for sells.
• Take partial profits at liquidity zones or a Fair Value Gap (FVG) fill.
• Exit fully before the New York session opens unless expecting further continuation.

5. Example Trade Setup: London Session Liquidity Grab & Reversal

Example: Bullish Setup

1. The Asian session consolidates with a tight range.
2. At London open, price sweeps Asian session lows, grabbing liquidity.
3. Price then creates a Break of Structure (BOS) to the upside.
4. The trader enters the retracement to a Bullish Order Block (OB).
5. The target is set at previous liquidity highs or a key Fair Value Gap (FVG) fill.

Example: Bearish Setup

1. The Asian session consolidates with equal highs.
2. At the London Open, the price sweeps the Asian highs, triggering buy stops.
3. Price rejects strongly and forms a BOS downward.
4. The trader enters on the retracement to a Bearish Order Block (OB).
5. The target is set at previous liquidity lows.

6. Summary & Key Takeaways

✅ The London session is the most liquid and volatile, making it ideal for Smart Money trading.
✅ Session bias is crucial—always determine whether institutions are likely to push prices up or down.
✅ Key time windows help traders anticipate market moves, with the London Open Kill Zone being the most important.
✅ Liquidity sweeps and Break of Structure (BOS) confirm Smart Money’s direction.
✅ Use Order Blocks (OBs) and Fair Value Gaps (FVGs) for precise entries.

By applying these strategies, traders can align with Smart Money movements and execute high-probability trades during the London session.