Is Forex 24/7?

The foreign exchange (forex) market is the largest and most liquid financial market in the world, with an average daily trading volume exceeding $6 trillion. It plays a crucial role in the global economy by facilitating the exchange of currencies for international trade and investment.

The Myth of 24/7: What Is Forex Really Open For？

Imagine waking up at 3 am with a sudden urge to trade currencies. The global markets never sleep, right？ Well, not exactly. While the foreign exchange market, or Forex, boasts extended hours compared to traditional stock exchanges, the “24/7” label can be misleading. Let's delve into the reality of Forex trading hours and what you need to know before diving in.

4 Major Forex Trading Sessions

The forex market operates 24 hours a day, five days a week, due to the different time zones of major financial centers around the world. These centers include Tokyo, Sydney, London, and New York, which represent Asian, Australian, European, and North American trading sessions, respectively.

Asian Session (Tokyo)

Starts around 12:00 a.m. GMT and ends around 8:00 a.m. GMT. This session is quieter and less volatile compared to other sessions. It is dominated by trading activity in the Japanese yen, Australian dollar, and New Zealand dollar.

Economic indicators such as the Tankan survey from Japan, trade balance data, and GDP releases can impact trading. Geopolitical events in the region, as well as policy decisions from central banks, can also influence market sentiment.

European Session (London)

Begins at around 8:00 a.m. GMT and ends at around 4:00 p.m. GMT. This session is the most active and liquid, with the major currencies being traded including the euro, British pound, and Swiss franc.

Key economic indicators include Eurozone GDP, inflation, and PMI data, as well as interest rate decisions from the European Central Bank (ECB). News regarding Brexit and developments in European politics can also be influential.

North American Session (New York)

Starts at around 1:00 p.m. GMT and ends at around 9:00 p.m. GMT. This session focuses on trading in the U.S. dollar, Canadian dollar, and Mexican peso. It tends to be less volatile compared to the European session but still sees significant trading activity.

Economic indicators such as U.S. non-farm payrolls, GDP, and consumer sentiment data are closely watched. Additionally, speeches or policy decisions from the Federal Reserve and Bank of Canada can impact trading.

Australian Session (Sydney)

Overlapping with the Tokyo session, it starts at around 10:00 p.m. GMT and ends at around 6:00 a.m. GMT. This session overlaps with the Asian session and is generally less volatile compared to the European and North American sessions. It is dominated by trading activity in the Australian dollar.

Economic data releases from Australia, such as employment figures, inflation data, and the Reserve Bank of Australia (RBA) interest rate decisions, can impact this session. Additionally, any developments in the Asian markets, as well as global commodity prices (since Australia is a major commodity exporter), can influence trading activity during this session.

Overlap Periods

European and North American Overlap: This occurs from 1:00 p.m. to 4:00 p.m. GMT, where both sessions are open simultaneously.

Asian and European Overlap: From 8:00 a.m. to 9:00 a.m. GMT, these sessions overlap.

During overlap periods, such as the European and North American overlap, the market is most active and liquid. Traders often find more trading opportunities and higher volatility during these times, making it a focus on executing trading strategies.

24/7 Nature of Forex

Continuous Trading

The forex market operates continuously because when one major trading center closes, another one opens, ensuring that trading can continue around the clock. For example, when the North American session closes, the Asian session is just beginning, allowing traders to participate in trading activities at almost any time during the trading week.

Variation in Liquidity and Volatility

While the forex market is open 24/7, the level of liquidity and volatility can vary throughout the day. Liquidity refers to the ease with which a currency pair can be bought or sold without significantly affecting its price, while volatility refers to the degree of price fluctuations. The market tends to be most active and liquid during overlap periods when multiple trading sessions are open simultaneously.

For example, during the overlap between the European and North American sessions, there is typically a higher volume of trading activity, leading to increased liquidity and volatility. During times when only one major trading session is open, such as during the Asian session, liquidity and volatility may be lower, making it potentially more challenging to execute trades at desired prices.

Description as 24/7

The forex market is often described as 24/7 rather than 24/5 to emphasize its continuous nature and the ability for traders to access the market at any time during the trading week. This description highlights the unique feature of the forex market compared to other financial markets, such as stock exchanges, which have specific opening and closing times and are closed on weekends.

From a marketing perspective, “24/7” highlights the flexibility and potential for round-the-clock trading, which can be appealing to some traders. However, the weekend closure (48 hours) represents a significant gap in trading activity and should be factored into any trading strategy.

Forex Knowledge Center

How does Forex Work？

Forex is a network where buyers and sellers exchange currencies at agreed prices. It's how individuals, companies, and central banks convert one currency into another. If you've traveled abroad, you've likely engaged in a forex transaction. While a lot of forex activity serves practical purposes, most currency conversions aim to earn a profit.

For example, The EUR/USD, also known as the “Euro/Dollar”, is the most traded currency pair in the world. In this currency pair, the Euro is the base currency, and the US Dollar is the quote currency. Traders and investors use this currency pair to speculate on the relative strength of the Euro against the US Dollar or vice versa. It tells you how many US dollars you need to buy one euro. The current exchange rate, as of the close of the market on Friday, February 17th, 2024, is 1 EUR = 1.0768 USD. This means that it costs 1.0768 US dollars to buy one euro.

We can divide the forex market into three categories: Spot, Forward and Future.

• Spot market: The foreign exchange spot market means that both parties to the transaction agree to sell one currency and buy another currency at the current market price. Spot foreign exchange is usually a physical transaction of currency pairs, which occurs at the moment of transaction delivery, that is, “spot”, or a short period of time thereafter.

• Forward market: Forward foreign exchange trading refers to the establishment of a contract to buy or sell a currency at a specific price, which is usually delivered on a predetermined future date or within a certain date range. Forward contracts can be used to lock in an exchange rate at a time in the future when the exchange rate is expected to rise.

• Future market: The futures foreign exchange market refers to the establishment of a contract to buy or sell a certain amount of a certain currency at a specified price on a specified date in the future. The futures foreign exchange market is similar to the forward foreign exchange market. The difference is that all futures contracts have legally binding and specified expiration dates, and must be delivered upon expiration.

Where do You Trade Forex？

Unlike other financial products such as stocks, Forex trading is not conducted through an exchange. Currencies are traded directly between buyers and sellers in the over-the-counter market (OTC). In other words, the foreign exchange market trading center operates among the global banking network and is distributed in major OTC markets in different time zones such as London, New York, Sydney and Tokyo. Since Forex trading does not need to go through a central location, trading can be conducted 24 hours a day.

To trade Forex, you need a forex broker. Here we list some trusted forex brokers standing out for their offerings and reputation for you.

• IG is recognized as the best overall broker and is highly trusted in the industry.

• Interactive Brokers (IB) is praised for its comprehensive services, particularly appealing to professionals.

• Saxo is renowned for its web-based trading platform, offering a seamless trading experience.

• CMC Markets excels in platform technology, providing traders with advanced tools and features.

• Forex.com is highly regarded for its all-round offering, catering to a wide range of traders.

• TD Ameritrade stands out for its desktop platform, known for its user-friendly interface and powerful features.

• XTB is recognized for its research and education resources, providing traders with valuable insights and educational materials.

• eToro is considered the best for copy trading and crypto trading, offering innovative social trading features and a wide range of cryptocurrency options.

Popular Trading Tools in Forex

Pip Size Calculator

A pip (percentage in point) is a unit of measurement used in forex trading to describe the change in value between two currencies. It is usually the smallest change in the exchange rate of a currency pair. The pip size calculator will help you determine the value per pip in your base currency so that you can monitor your risk per trade with more accuracy. All you need is your base currency, the currency pair you are trading on, the exchange rate and your position size in order to calculate the value of a pip. The calculation is performed as follows: Pip Value = (One Pip Exchange Rate) * Lot Size.

Here is an example: currency pair is EUR/USD, in which account base currency: EUR. And exchange rate is 1.07753 now. Additionally, one pip is 0.0001 and lot size is 1 lot (100000 EUR). Then we can calculate that pip Value = 0.0001 1.07753 * 100000. So each pip is worth EUR 9.28.

Forex Profit Calculator

A trading profit calculator is a tool used by traders in the financial markets, including forex, stocks, and commodities, to estimate the potential profit or loss of a trade before it is executed or after it is closed. This calculator helps traders manage risk by allowing them to determine the potential reward relative to the risk of a trade.

For example, if a trader buys 1 lot of EUR/USD at 1.07796 and sells it at 1.09796, the calculator would calculate the profit based on the 200-pip difference between the two prices. If each pip is worth $10 for a standard lot in EUR/USD, the calculator would show a profit of $2,000.00 for this trade.

Trading Strategies for Different Timeframes

Scalping

For traders looking to make quick, short-term trades, high liquidity and volatility are key. The London-New York overlap (3 PM - 8 PM GMT) is often preferred due to increased trading activity and price movements during this time, making it ideal for scalping.

Day Trading

Day traders focus on making trades within a single day, aiming to capitalize on intraday price movements. The Asian-European overlap (8 AM - 1 PM GMT) and the European-North American overlap (1 PM - 4 PM GMT) are both periods of high trading activity, providing ample opportunities for day traders to enter and exit trades.

Swing Trading

Swing traders hold positions for longer periods, ranging from a few days to several weeks. Optimal trading hours for swing trading are less dependent on specific times of day and more on broader market trends.

Benefits and Challenges of the 24/7 Forex Market

Benefits

The 24/7 nature of the forex market offers traders several benefits, including flexibility, access to global markets, and the ability to trade at any time. These advantages make the forex market an attractive option for traders looking for a dynamic and liquid trading environment.

Ability to Trade at Any Time: One of the key advantages of a 24/7 forex market is that traders can participate in trading activities at any time of the day or night, depending on their schedule and preferences. This flexibility allows traders to take advantage of trading opportunities that may arise outside of traditional trading hours.

Access to Global Markets: The forex market operates across different time zones and major financial centers around the world. This means that traders have access to a wide range of currency pairs and trading opportunities from various countries and regions. This global nature of the market provides traders with the ability to diversify their trading portfolio and take advantage of different market conditions.

Continuous Price Discovery: With the forex market operating continuously, price discovery is also continuous. This means that traders can see real-time price movements and react quickly to changes in the market. This continuous price discovery helps traders make informed trading decisions and manage their risk more effectively.

Opportunities for Short-Term Trading: The 24/7 nature of the forex market also provides opportunities for short-term traders, such as day traders and scalpers, to take advantage of short-term price movements. These traders can enter and exit positions quickly, potentially capitalizing on small price fluctuations throughout the day.

Challenges

While a 24/7 forex market offers flexibility and trading opportunities, it also presents challenges that traders need to be aware of and manage effectively to be successful in their trading endeavors.

Constant Monitoring: One of the primary challenges of a 24/7 forex market is the need for constant monitoring. Since the market is open around the clock, traders need to stay vigilant and monitor their positions, market news, and economic indicators at all times.

Increased Volatility During Off-Hours: While the forex market is generally more liquid and volatile during overlap periods when multiple major markets are open simultaneously, it can also experience increased volatility during off-hours when only one major market is open.

Impact on Traders' Health and Lifestyle: The 24/7 nature of the forex market can have a significant impact on traders' health and lifestyle. The need to be constantly available and responsive to market changes can lead to stress, sleep deprivation, and other health issues.

Market Gaps and Illiquidity: During off-hours, the forex market may experience market gaps and periods of illiquidity, especially in less traded currency pairs. This can make it difficult for traders to execute trades at desired prices, leading to slippage and potential losses.

Beyond Forex: Comparing Traditional Stock Markets

Trading hours differ between the forex and stock markets.

The forex market operates 24 hours a day, five days a week, due to time zone overlaps. This flexibility is a key advantage of forex trading over stocks.

In contrast, stock market trading follows a set daily timetable based on the region and exchange. But For example, U.S. stock exchanges like the NYSE and Nasdaq are typically open from 9:30 a.m. to 4 p.m. Eastern Time (ET). It should be noted that stock and forex trading generally do not occur on weekends.

Due to technological advancements and increased demand, however, there have been a lot of changes to stocks. Some 24-hour stocks has emerged. Robinhood allow users to engage in 24-hour trading of selected exchange-traded funds and popular stocks such as Apple and Tesla, which makes it the first U.S. brokerage to offer 24-hour trading in individual stocks.

Best Time to Buy and Sell Stocks

First thing in the morning, market volumes and prices can go wild. For seasoned day traders, the first 15 minutes following the opening bell is prime time, usually offering some of the biggest trades of the day on the initial trends.

• Best Day to Buy or Sell Stocks

People believe that genelly Monday is the best day of the week to buy stocks, and Thursday or early Friday is the best day to sell stock—before prices dip.

• Best Month to Buy and Sell Stocks

The markets tend to have strong returns in March, April, and July, and then the fall months into winter, October to December.

Conclusion

The forex market, usually described as operting 24/7 to emphasizes flexibility and potential round-the-clock trading, operates 24/5 in fact, with overlap periods between major trading centers (Tokyo, London, New York, Sydney) offering peak activity. Each session features specific currencies and has different volatility and liquidity levels. You can match the trading strategy with session characteristics and choose currency pairs based on active sessions. Understanding forex market hours can help you navigate the market strategically, maximize potential, and trade responsibly for a more successful experience.