Why is the Forex Market Open 24 Hours a Day?
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If you have already started the investment ride, the forex market is a familiar place. But if you want to multiply the portfolio, then Forex is the best bet. Forex is the market where you can trade one monetary exchange against another. Therefore, the motivation of the active participants is much higher.
This is the foremost reason Forex is open 24/7 a day. You can trade currencies all during the day. The primary motive is the time zone in your country. More importantly, the trade hours are different in each country.
Understanding Forex market hours
As we talk about international currency markets, it is generally based on commercial companies, banks, investment management firms, central banks, hedges funds, forex brokers, etc.
This is generally because the market is operating in different time zones, and it can easily be assessed at any time of the day besides the weekend break.
The international currency market is not at all dominated by the single market exchange. But instead, it involves a global exchange network and brokers from all over the world.
Forex trading hours are generally based on the facts that when trading working in each participating country. Accepted time zones of each region are:
- New York 8 am to 5 pm EST (1 pm to 10 pm UTC)
- Tokyo 7pm to 4am EST (12am to 9am UTC)
- Sydney 5 pm to 2 am EST (10 pm to 7 am UTC)
- London 3 am to 12 noon EST (8 pm to 5 pm UTC)
Do traders need to trade 24 hours a day?
Well, it is not possible and not required to trade 24 hours a day! It might make you feel bored, and you start making some bad trades.
If a market lets you trade 24 hours a day, it does not mean that you should trade every second. This is a big mistake, especially for beginners. Throughout the whole day, you won’t experience great results at all.
If half of the trading day displays great results, then the rest of the day might work against you. Again, it probably depends on the currency pair which you are about to trade.
Most active trading times start when the London trading session opens itself. In short, the best trading period happens when London and New York sessions cross themselves.
Which are the two busiest time zones in a forex market?
New York and London are considered to be the two major busiest time zones in a forex market. Therefore, the moment when both of these trading sessions start to overlap each other is the time when the most active period will start.
This period or phase will also account for the maximum volume traded, around $6 trillion within a day market. During this period, the WMR/Reuters benchmark spot foreign exchange rate is also determined.
Any rate set at 4 pm London time is generally used for the daily valuation or the pricing for different money managers and pension funds.
The few most traded currencies in London and New York Sessions are the US dollar and Euro, the Japanese yen, and the British pound or the Australian dollar. You can even trade with the Canadian Dollar as well as New Zealand Dollar.
Can you trade in pairs in the forex market?
The central bank is accountable for preserving the value of its currency. This consists of the base currency and the quote currency.
If you trade the US dollar with the Japanese yen, the dollar is the base currency, and the yen is the estimation currency. The majority of the global trade is conducted in US dollars. The volume of the dollar is extensive. Why is Forex a big market?
If an investor believes that the US dollar will rise compared to the Japanese yen, the US dollar will be bought, and the Japanese yen will be sold. However, if the same investor believes the Euro will decrease compared to the US dollar, EUR/USD will be sold by opening a sell position for one lot of that pair.
Either way, if their bet is precise, they will incur profit, but they will suffer a loss if the bet is inexact. Thus, the forex market facilitates investors around the world. This is the reason the forex market is open 24 hours a day.
What are the forex trading hours?
The best thing about the forex market is that you will find it open 24 hours a day. This will enable investors from all over the globe to start trading even during regular business hours, which can be either after work or at night time.
But all the trading hours are not the same as the opportunities for traders. For example, there might be some trading periods when the prices are volatile, whereas, in some conditions, the price will stay standstill.
Different currency pairs have varying trading activities during the trading day. Hence, various currencies can easily be traded when the prices change so suddenly that the traders cannot monitor the trade position.
What are the three different trading sessions in a forex market?
The trader should know when the forex market faces the highest volatility and infer to reduce the risks.
Hence, the trade market is divided into three major trading sessions with the highest activity levels. This includes Asian, European, and North American trading sessions.
Most popularly known as the London, Tokyo, and New York Session, these are the primary centres of the financial industry on each continent.
Forex trading is a pearl. It is a treasure that gives away enormous prizes for little loss. Collateral damage can be sorted out by joining the right platform and the right set of understanding. Indulgence with Forex is dependent on how expert skills are learned.
For traders looking to go beyond national gains, there is no improved stage than the forex market. Traders have the chance to select the time that favours them. If a trader believes that one currency is growing to make well-informed decisions, he can rapidly switch to it.
Do a bit of research on the best trading hours of Forex and try your luck right now!
Jason Morgan is an experienced forex analyst and writer with a deep understanding of the financial markets. With over 13+ years of industry experience, he has honed his skills in analyzing and forecasting currency movements, providing valuable insights to traders and investors.
Forex Content Writer | Market Analyst