Forex Trading Online // Why, When & How

You might have heard that forex market is open 24 hours a day, and that it is the biggest and most liquid market in the world. This is true, and this provides traders with lots of great opportunities for trading any time of the day or even at night for 5.5 days a week around the world. Forex market closes only for the weekend.

Trading in the forex is different from trading stocks, as there is no central location (like stock exchange) but is conducted between participating financial centers worldwide through electronic communication networks (ECNs).

Globally forex market consist of three main regions: Australasia, Europe and North America. Within each of these main areas there are several financial centers. For example, Europe is comprised of major centers like London, Paris, Frankfurt and Zurich. Banks, institutions and dealers all conduct forex trading for themselves and their clients in each of these markets.

Every weekday forex trading starts with the opening of the Australasia area, followed by Europe and then North America. As one region’s markets close another opens, or has already opened, and continues to trade in the forex market. Often these markets will overlap for a couple hours providing some of the most active forex trading as I describe in best forex trading times here . Usually these overlaps provide best forex trading times.

To illustrate this – if a forex trader in Europe wakes up at 4am and decides to do some currency trading, he will be unable to do so through European forex dealers, but can trade through Australian dealers. All forex brokers are interconnected to global forex network so there is no point during the trading week that a participant in the forex market can’t trade.

During its open hours trading can be done 24 hours a day, and you can leave your trades/positions open even thru weekend with no problem.

From GMT time perspective first trade market begins in Tokyo, Japan, at 7:00 pm Eastern Standard Time (EST) followed by markets in Singapore and Hong Kong that both open at 9:00 pm EST. Then Frankfurt market opens at 2:00 am EST, followed by London at 3:00 am EST, for the European market. By 4:00 am EST, the Asian market has closed and all trading stops in that area of the world. The European market on the other hand is in its busiest time. The market in the United States of America starts in New York at 8:00 am EST. By this time, the European market is coming to a close. The market in Australia comes to life at around 5:00 pm EST, and by 7:00 pm, the Japan market starts up again in Tokyo, completing one trading day.

From US trader’s perspective forex trading hours and trading times are as follows:

New York open 8:00 am to 5:00 pm EST
Tokyo open 7:00 pm to 4:00 am EST
Sydney open 5:00 pm to 2:00 am EST
London open 3:00 am to 12:00 noon EST

And so, there are hours when two sessions are overlapped:

New York and London — 8:00 am — 12:00 noon EST
Sydney / Tokyo — 7:00 pm — 2:00 am EST
London / Tokyo — 3:00 am — 4:00am EST

The ability of forex market to be active 24-hours daily, is due in part to different time zones and the fact it is comprised of a network of computers (ECN), rather than any one physical exchange that closes at a particular time.

When you hear that the U.S. dollar closed at a certain rate, it simply means that that was the rate at market close in New York. But it continues to be traded around the world long after New York’s close, unlike securities.

Another thing to be aware of is the rollover (when an account with any open positions is either credited of debited interest on the full size of the positions), which happens at 5pm EST.

Also at that time, each trading day, the total Forex volume is determined by summing the number transactions of all markets.