Tuesday, April 19, 2016

How does the Forex market trade 24 hours a day?

How does the Forex market trade 24 hours a day?

Rabat – Foreign exchange is the largest financial market in the world. Around $5 trillion is traded in Forex every day. This is because markets around the world participate in trading Forex. The consequence of which is that the Forex market is open 24 hours a day.

How is it open 24 hour a day?

The stock market has very specific opening and closing times – usually 9:30 to 16:00. But this is because the market is located in one place. The NYSE[1] of course is in New York, the LSE in London, etc.

The Forex market however exists by trading worldwide. Currencies are in demand in every part of the world, and since it is always office hours somewhere, it is always possible to trade. Forex runs on a network of computers that are constantly trading and there is no centralised exchange.

However, it is important to remember that there are periods of high volatility, during which you're much likelier to make money.

Weekends and holidays

The one caveat is that the Forex market is closed on weekends and global holidays. Essentially, trading is possible 24/5. Trading is open from 10pm GMT on Sunday, since that is when Monday starts in New Zealand.

Who participates in 24 hour Forex trading?

Currency is always necessary for financial trade. Central banks and worldwide businesses are therefore trading currency most of the time. Australia/New Zealand are the "earliest" traders, followed by Europe and then North America – as one region close another is just getting started. Brokers do, however, have trading breaks but they usually last just minutes.

Since countries are never perfectly stable politically or otherwise, there is constant fluctuation happening in various economies. This sets the stage for advantageous and disadvantageous trades for 24 hours every day.

Where does Forex trading take place?

Forex trading takes place online. There is no central exchange as currency is needed on demand wherever you happen to be. This is why the Forex market is open 24 hours a day[2]. No offices or physical platforms are necessary.

Should I be trading 24 hours a day?

Since the Forex market is open 24 hours a day, you may start to think that you need to be constantly ready to trade. After all, if you blink you'll miss something, right?

Well, not quite. There are periods of high and low volatility. The most trades happen when the London session opens, and the best period is when the New York and London sessions cross. You should choose your trading hours both on what suits you and the times you can expect volatility. Trading all day does not make practical sense.

Always accessible

Foreign exchange is the most traded market in the world. Because the Forex market is open 24 hours a day, it is accessible to anyone anywhere. This makes trading possible even if you have a full-time job.

Although it is easily accessible, it is not always easy to make good trades. Ensure you learn as much as you can before you start, and trade responsibly.

Join the Conversation. What do you think?

References

  1. ^ NYSE (www.nyse.com)
  2. ^ why the Forex market is open 24 hours a day (www.admiralmarkets.com)

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