In the foreign exchange (forex) market, global currencies are traded at all times of the day. The forex market is very liquid, and the increased availability of advanced technology and information processing has only increased the number of participants and the volume of trades.
Key Takeaways
Currencies trade 24 hours a day in the forex market, meaning that you can often place an FX trade at any time.
This is achieved as trading transitions from one major market in a certain time zone to another as the day progresses (e.g., from London to New York to Sydney to Tokyo).
Retail traders often are limited to trading Monday through Friday, however.
Because markets can move at any hour, many forex day traders prefer not to hold positions overnight.
Non-stop Trading
Although markets in many foreign countries are closed when North American markets are open, trading foreign currencies still takes place. While the majority of trading on a particular currency occurs when its main market is open, many other banks around the world hold foreign currencies, enabling them to be traded at times when the main market is closed.
For example, the North American markets are open when the Japanese markets are closed, but North American traders are still able to buy and sell Japanese yen through their brokerages and banks. However, the market for the Japanese yen is more liquid at times when the Japanese market is open.
Market hours around the world will overlap, but it is usually the case that primary markets at a particular period of time will be:
New York: 8 a.m. to 5 p.m. (ET)
Tokyo: 7 p.m. to 4 a.m. (ET)
Sydney: 3 p.m. to 12 a.m. (ET)
London: 3 a.m. to 11 a.m. (ET)
Drawbacks to Trading When a Currency's Market Is Closed
Some investors would not recommend trading when a currency's market is closed.At market close, a number of trading positions are being closed, which can create volatility in the forex markets and cause prices to move erratically. The same can be the case when markets open. At this time, traders are opening positions perhaps because they don't want to hold them over the weekend.
Holding trades over a weekend is not recommended unless your method as a forex trader is to follow a long-term strategy, which incorporates holding trades for weeks or months.
Weekend Trading
The U.S. forex market closes on Friday at 5 p.m. EST and opens on Sunday at 5 p.m. ET. Although the market is only closed to retail traders, forex trading takes place over the weekend through central banks and other organizations. Therefore, there is often a difference in price between Friday's close and Sunday's opening. This difference is known as a gap.
Traders who do not want to expose their position to the risk of gapping will close their position on Friday evening or place stops and limits to manage this risk.
In certain countries where there is market tension, a bank could go bust in the space of a weekend. This could mean that your position will change dramatically by the time the market opens again on Sunday.
Special Considerations
Certain currencies have very low rates of demand for exchange purposes. As a result, these currencies can be difficult to trade and can usually only be traded in specific banks. Because currency trading does not take place on a regulated exchange, there is no assurance that there will be someone who will match the specifications of your trade.
However, the major currencies of the world, such as the American dollar (USD), the euro (EUR), and the Japanese yen (JPY), are among the most widely available.
When Should You Not Trade Forex?
For the best odds of a successful trade, there are some times when you may decide it's better to avoid trading forex. For instance, you may wish to stay out of the markets on Fridays and Mondays to avoid gap risk. Some traders may also wish to avoid holding their positions over the weekend. Traders also tend to avoid trading forex on bank holidays and times when market news impacts currency values.
Can You Trade Forex Over the Weekend?
The forex markets are closed on weekends, so you'll need to wait until it opens again, which is 5 p.m. ET on Sundays.
Can You Hold a Forex Position Overnight?
How long you should hold a forex position depends on your goals. Holding a forex position overnight opens you up to gap risk, but it could also help you take advantage of additional volatility in some markets. It's important to weigh the risks of an overnight position against what you hope to gain.
The Bottom Line
Because of time zones, there are forex markets open 24 hours a day, five days a week. That means you can trade forex even when a currency's main market is closed. As a retail investor, you won't be able to trade on weekends, as all the markets close for that time.
Because of time zones, there are forex markets open 24 hours a day, five days a week. That means you can trade forex even when a currency's main market is closed. As a retail investor, you won't be able to trade on weekends, as all the markets close for that time.
While the forex market is a 24-hour market, some currencies in several emerging markets are not traded 24 hours a day. The seven most traded currencies in the world are the U.S. dollar, euro, Japanese yen, British pound, Australian dollar, Canadian dollar, and Swiss franc.
FX markets are open 24/5 making them one of the most available markets to trade. However, some hours of the day will generally see more liquidity and volatility in forex pairs.
The forex market is open 24 hours a day, from Sunday evening until Friday night. This is due to the various international time zones which allow you to trade all hours of the day. There are major trading sessions in these three locations: Tokyo (Asian session)
Because of time zones, there are forex markets open 24 hours a day, five days a week. That means you can trade forex even when a currency's main market is closed. As a retail investor, you won't be able to trade on weekends, as all the markets close for that time.
When the markets are closed you are unable to trade. As trading occurs only when the market is open (open positions, close positions, place and modify orders) so when the markets are closed, there are no trades available.
Open-market operations typically involve the buying and selling of government securities by one central bank in the open market. These transactions allow for the expansion or reduction of the amount of money in the banking system at a given time.
The forex market can be operated 24/7 Monday to Friday. The markets close over the weekends, but still provides traders with opportunities to make use of this time to build a trading strategy.
The U.S./London markets overlap (8 a.m. to noon EST) has the heaviest volume of trading and is best for trading opportunities. The Sydney/Tokyo markets overlap (2 a.m. to 4 a.m.) is not as volatile as the U.S./London overlap, but it still offers opportunities.
Are Forex Brokers and Forex trading legal in the U.S.? Yes, forex brokers are legal in the U.S., but they must be registered with and regulated by the Commodity Futures Trading Commission (CFTC) and be members of the National Futures Association (NFA).
Now you know that Monday and Friday are bad days for trading and the latter is worse than the former. If you exclude Monday and Friday from your trading you will discover that the best trading setups emerge between Tuesday and Thursday.
Some traders follow something called the "10 a.m. rule." The stock market opens for trading at 9:30 a.m., and the time between 9:30 a.m. and 10 a.m. often has significant trading volume. Traders that follow the 10 a.m. rule think a stock's price trajectory is relatively set for the day by the end of that half-hour.
The forex market opening time in India is from 9.00 a.m. to 5.00 p.m., with cross-currency trade continuing till 7.30 p.m. However, liquidity and variability are not always consistent over India's currency market hours. They differ due to overlapping trade sessions all around the globe.
The U.S./London markets overlap (8 a.m. to noon EST) has the heaviest volume of trading and is best for trading opportunities. The Sydney/Tokyo markets overlap (2 a.m. to 4 a.m.) is not as volatile as the U.S./London overlap, but it still offers opportunities.
United States. Forex trading is legal in the United States, but it is highly regulated by several government agencies. The Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) oversee the forex market and enforce strict regulations to protect investors from fraud and manipulation.
Yes, it is true that the forex market is open 24 hours a day, but that doesn't mean it's always active the entire day. You can make money trading when the market moves up, and you can even make money when the market moves down.
Introduction: My name is Saturnina Altenwerth DVM, I am a witty, perfect, combative, beautiful, determined, fancy, determined person who loves writing and wants to share my knowledge and understanding with you.
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