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.
So, in short, nothing happens when you hold onto a forex trade over the weekend – you're unable to touch the position and won't have visibility on any changes in market price until the market reopens!
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.
Cryptocurrency markets now operate 24/7 across exchanges so traders can long or short digital assets like Bitcoin and Ethereum. Tokenized stocks are accessible as well when primary equity markets are closed. Commodities that trade electronically over the weekend include gold, oil, and treasuries.
Can you buy stocks after hours? Yes. After-hours trading allows for stocks to be traded after the stock market's regular hours. However, investors should be prepared for their orders to not be filled as quickly (or even at all) due to the lower trading volume during these extended market hours.
If you are bearish, then avoid trading when the market doesn't reflect a bearish pattern – wait for possible reversal points before you enter a position. You need to define what a tradable trend is for you, and avoid placing a trade when market conditions do not reflect your trading strategy.
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.
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. Learn the best times to trade forex for price action.
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.
There will be times where a currency is moving differently from normal. Perhaps price is spiking and you don't know why. This is a good time to stay out of the market. If you can't understand why price is behaving in a certain way, it is usually due to some unscheduled news that has been released or leaked.
Major forex pairs, such as EUR/USD (Euro/US dollar), USD/JPY (US dollar/Japanese yen), and GBP/USD (British pound/US dollar), remain attractive options for night trading due to their liquidity and stable price movements. As these are the most traded pairs in forex, many market participants favour them.
Forex market hours are the hours during which forex market participants all around the world can buy, sell, exchange, and speculate on global currencies. The forex market is open 24 hours a day during weekdays but closes on weekends.
A simple risk management strategy is to set your stop loss below the opening of the Monday price and a target at Friday's close. More advanced traders will use trailing stops to reduce risk and look for opportunities to extend profits should the market return to Friday's close.
Any temporary volatility won't affect your trading. If you are a day trader, your trades last from several minutes to several hours, this question isn't for you as well. You will consider keeping trades open over a weekend if you are a swing trader who has one trade last for up to several days.
Companies often release earnings reports or other significant news during weekends, which can result in dramatic price changes once markets open the following week. By placing your orders during the weekend, you might be able to capitalize on these expected price movements.
However, when taking a trade, you should still consider if the profit potential is likely to outweigh the risk. If the profit potential is similar to or lower than the risk, by all means avoid the trade. That may mean doing all this work only to realize you shouldn't take the trade.
There will be times where a currency is moving differently from normal. Perhaps price is spiking and you don't know why. This is a good time to stay out of the market. If you can't understand why price is behaving in a certain way, it is usually due to some unscheduled news that has been released or leaked.
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.
Introduction: My name is Mrs. Angelic Larkin, I am a cute, charming, funny, determined, inexpensive, joyous, cheerful person who loves writing and wants to share my knowledge and understanding with you.
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