Forex market Trading Hours: Facts for investors
Core Forex trading does not take place on a centralized exchange.
All market participants act globally and directly with each other.
Trading on the stock exchange is possible almost around the clock.
Course gaps – so-called opening gaps – do not appear as well in forex trading.
The so-called overnight trading can result in both a positive and a negative rollover.
At Forex daytrading with daytrading Software or in seconds trading, minimal price fluctuations can lead to short-term profits.
In principle, FX trading could also be continued over the weekend without interruption. With regard to private traders, this is particularly evident in ECN brokers: They could also run their platforms on weekends and allow traders to place orders that could be served by other traders. What would theoretically be possible, however, cannot be achieved at present, because at weekends the market is simply not frequent enough.
Forex Trading Hours
Overview of Forex Trading hours
In practice, however, liquidity is too low on the weekend, even on the FX market, which is why trading on weekends will hardly take place in the foreseeable future. The reason for this is obvious: on Saturdays and Sundays, institutional market participants do not act, which eliminates a significant part of the market volume. Forex Retail brokers cannot offer their customers trading on weekends because their own liquidity brokers do not provide courses (STP broker) or because they are unable to reliably secure net positions (market maker). The liquidity of ECN brokers would not normally be sufficient.
Nevertheless, Forex trading times have an enormous advantage over stock trading – and since trading in foreign exchange on the market is possible in principle from Sunday night to Friday evening, only small trading hours are lost. Already Sunday 22:00 CET opens the market in Australia, while Fridays is around 11pm. It becomes interesting when opening times overlap, because here are particularly many market participants active. In Germany, especially in the afternoon from 1pm, good chances are calculated, as both trade in the US market and trade in European countries is possible.
The fact that opening hours play a much lower role in forex market than in exchange trading brings many advantages. First, during the week there will be no opening gaps, which can be undertaken by risk management. Secondly, there are distortions in the price development that arise solely from the reaction of market participants to the impending end of a trading day (especially in front of important news!).
While large fluctuations occur in the stock market, especially after the opening and shortly before the closing of the market, trade in foreign currencies remains largely unaffected. In the stock market, it is necessary to keep an eye on the positions in these times. It is recommended to buy or close first positions when the initial fluctuations have calmed down to avoid major losses.
The fluctuations are largely due to news and unforeseeable actions of market participants, often as mentioned just before the closing of the market. Some traders may have made a negative deal and tried to compensate for the loss shortly before the end of an increased risk. Others are putting the day’s profit on the whole, in order to strike out again as much as possible. Messages that arrive late in the evening or at night bring participants to action. For example, you want to take advantage of announced price fluctuations. These actions have a huge impact on the market and, of course, have a certain risk as they are difficult to assess.
In the forex, however, these daily fluctuations are more or less due to the fact that the trade is consistently possible. Thus, this also means a reduced risk of suffering losses due to the unpredictable price fluctuations. Of course, no one can predict exactly how the market will develop without speculating. This means that no direct recommendation can be given on the forex when positions should be closed. Rather, the activity here is based on the current price trend. To take full advantage of trading around the clock, all time zones should be kept in mind. Find out in advance what time you can trade with which currency.
Due to the time shift and the direct trading of market participants among themselves, currencies could basically be traded around the clock seven days a week. However, as market participants are also