Blog article provided by brokertested.com
It is no news to anyone that the most liquid financial market in the world – Forex is open 24 hours a day (excepting weekends). This means that anyone with an internet connection has the opportunity to trade currency pairs no matter where they are located in the world.
We will have a look at Forex market 24-hour availability in depth.
The Reason Behind 24 Hours Forex Market Trading
Let’s start with the most obvious reason: currency demand.
The demand for currency pairs is much higher than other assets. This means that there are more opportunities to make money by trading these markets 24 hours per day, which makes sense because they have greater potential rewards compared with stocks, bonds, commodities, etc.
Looking at trading schedules on Forex we can say that the market is divided in 4 time zones:
Tokyo – from 7 p.m. till 4 a.m.
New York – from 8 a.m. till 5 p.m.
Sydney – from 5 p.m. till 12 a.m.
London – from 3 a.m. till 12 p.m.
If the trade of a certain currency is closed in one time zone, it means that it still continues to be traded in another time zone. Thus, different time zones also explain the 24-hour trading ability.
In addition, transactions are carried out in digital reality, through a computer. If they were conducted through a physical exchange, then they were most likely open during common working hours.
As you see, the Forex trading market is designed with the idea that everyone has an equal opportunity for profitable deals.
Understanding Forex Market Hours
The reason why these cities are chosen as the centers of the time zone is that the four largest market exchanges are located here. There is no competition between them: they work on a par with the rest of Forex brokers and exchanges networks.
It is considered that London and New York are the two busiest time zones. The transactions carried out during the period activity these two, are big enough.
It does not mean you should forget about crossovers between the last two markets. Ideally, you need to watch your back whole trading process, because every crossover leads to market volatility which can result in big trades.
Do Traders Need to Trade Forex 24 Hours a Day?
When trading, it is important to be choosy about what time periods you trade in. There is no need for traders to trade 24 hours a day. The easiest way is to keep track of active trading hours. Very often it depends on your chosen trading style and currency pair you choose. For example, if you are an intraday trader, you should pay attention to the description of the London and New York crossovers.
Round-the-clock trading is relevant only when choosing a position trading strategy – in other cases it will not matter.
Summarizing all we will add that effective deals can only be done when the trader is attentive and focused. This is not possible if they have to monitor every move, which leads us back into our original argument that around-the hour trading does not make sense for most people.
To achieve incredible results in Forex trading, it is not necessary to monitor the market 24 hours a day. To reach success, you first need a specific goal, a plan of action and practicing.
Of course, you should keep in mind active hours in the market, in which the probability of transactions in your favor will be greater, but this is only half the work.
Also do not forget about the Forex broker factor. You can pick the one from high leverage brokers or other types that will correspond to your requests.