The Best Time to Trade Forex: When the Market Closes

The Best Time to Trade Forex: When the Market Closes

The forex market is open 24 hours a day, but that doesn't mean all hours are created equal. In fact, the time when the market closes can be a particularly advantageous time for traders. Learn why this is the case and how you can take advantage of it.

The Best Time to Trade Forex: When the Market Closes


Understanding the Forex Market and Trading Sessions.

The forex market is a decentralized market that operates 24 hours a day, 5 days a week. It is divided into four major trading sessions: the Sydney session, the Tokyo session, the London session, and the New York session. Each session has its own unique characteristics and trading opportunities.
Understanding these sessions and their overlaps can help traders identify the best times to trade forex and take advantage of market volatility.

What time does the Forex market open?

Forex market hours operate 24 hours a day during the week, but are closed on weekends. This continuous trading is possible because the forex market is traded all over the world in decentralized places. Forex market hours are divided into four main trading sessions. - Sydney - Tokyo - London -New York These are the largest trading centers and account for almost 75% of the daily FX volume. The market is open from 22:00 (UTC) on Sunday, when the Sydney sessions begin, until 22:00 on Friday, when the New York session closes for the weekend.

The actual opening hours of the Forex market depend on which of the four currency trading sessions you are interested in. Since trading all day would be next to impossible, forex traders tend to focus their energy on specific sessions or time periods. The opening hours of the foreign exchange market are:

  •  sydney  
           Opens 7 am 5 pm 10 p.m. close 4 p.m. 2 am 7 am 
  •  tokyo     
           Opens 9 a.m. 7 p.m. 12 am close 6 p.m. 4 a.m. 9 a.m. 
  •  London 
           Opens 8 a.m. 3:00 a.m 8 a.m. close 4 p.m. 12 am 4 p.m. 
  •  New York 
           Opens 8 a.m. 8 a.m. 1 pm close 5 pm 5 pm 10 p.m.

The Importance of Liquidity and Volatility.

When considering the best time to trade forex, it’s important to take into account both liquidity and volatility. Liquidity refers to the ease with which a trader can buy or sell a currency pair without affecting its price. Volatility, on the other hand, refers to the degree of price movement in a currency pair. When the market is highly liquid and volatile, it can be easier to make profits through trading. However, high volatility can also increase the risk of losses. Traders should consider their risk tolerance and trading strategy when deciding when to trade forex.

Factors to Consider When Choosing the Best Time to Trade Forex.

When it comes to trading forex, timing is everything. There are several factors to consider when choosing the best time to trade, including market volatility, economic events, and currency pair activity. The closing session of the forex market can be a great time for traders to make profits, but it’s important to have a solid trading plan and manage risk. By considering these factors and staying informed about market conditions, traders can make informed decisions about when to trade forex. 

The Forex market does not have a physical location, unlike the stock exchanges. Instead, it brings together an international network of large banks and institutions, each creating a market for a set of currencies, in what is truly a 24/5 market. Currency trading can be done 24 hours a day, since trading occurs in several areas at the same time, Asia, Europe and America. By traded volume, London is followed by the USA, Singapore and Japan

What are the Forex market hours?

At any time, there is always a Forex session open, although there are periods of inactivity when the market is quiet, usually in the evening between 7pm and 10pm, when New York is closing before Sydney begins.

What days and hours are the most active in the Forex market?

Although you can trade different currencies anytime you want, a trader cannot control a position for such long periods of time.

This means that there will be times when interesting opportunities are missed. Therefore, to reduce risk, a trader must know when the currency market is the most volatile and decide the best moments for his strategy, so pay attention to the following section regarding Forex trading sessions. 

The days of operation are from Monday to Friday and the hours are fixed by sessions that are determined by the hours in which the different markets operate. Normally, the Forex market is divided into three trading sessions during which activity is at its peak: the European trading session, the American session, and the Asian session. In general terms, the three sessions are known as the London, New York, and Tokyo or Sydney sessions. 

 trading session           Schedule         Trading Volume 

 London                     9:00-16:00             35% 
 NY                            1:00 -22:00          twenty % 
 tokyo                        00:00-9:00                 6% 
 sydney                      22:00-7:00               4 %

How Do Holidays Affect Forex Market Hours?

The operation of the markets is not only regulated by the official trading hours, but also depends on the holidays in the Forex market. During these holidays, some markets close earlier, so this situation affects trading as it is not possible to operate. Some assets may not be available for trading. For example, at Christmas or Thanksgiving, it is also common for most markets to close on New Year's Day. Holidays can negatively affect Forex operations, so every trader who operates in the market should be aware of holidays, as it is a fact that holidays in the Forex market generally cause low volatility in the markets. However, immediately after the Forex holidays end and the market opens, activity increases dramatically and a novice trader can incur significant risks. What are the major currency pairs that are traded during Forex market hours? The major pairs in Forex are the major currency pairs. They are made up of the US dollar (USD) paired with one of the following currencies: 
  •  - British Pound (GBP) 
  •  - Euro (EUR) 
  •  - Japanese Yen (JPY) 
  •  - Swiss Franc (CHF) 
  •  - Australian dollar (AUD)
  •  - New Zealand dollar (NZD) 
  •  - Canadian dollar (CAD) 
 The major currency pairs in Forex are the following: 
  • EUR/USD (Euro - US Dollar) 
  • USD/JPY (US Dollar - Yen) 
  • USD/CHF (US Dollar - Swiss Franc) 
  • USD/CAD (US Dollar - Canadian Dollar) 
  • GBP/USD (British Pound - US Dollar) 
  • AUD/USD (Australian dollar - US dollar)

What are the main trading platforms that operate in the Forex market?

Among the main trading platforms that operate in the Forex market are; MetaTrader 4: Which has been available on the market for many years, it is among the most widely used forex trading platforms, the software of which is available to many brokers. 

This platform is approved by professionals and inexperienced investors as it is very easy to use, readable and intuitive. There are many of those available on the internet which, in the opinion of many, are expected to improve or automate the decision-making process. 

The automaton identified as an Expert Advisor (EA) makes buy/sell decisions, based on a predefined algorithm. xStation platform: It is another of the most popular platforms, it is original. The platform provides the user with access to extensive tools for technical analysis, market analysis, commentary, macroeconomic and statistical calendar. xStation is available on three devices, as a desktop or laptop installation version, as a web platform and as a mobile app.

Is a local broker required to trade the Forex market?

A real fact is that currently the Forex market is available to citizens through an international broker without a physical office in Colombia. In this case, the trader must withdraw the amount to be invested outside the country, using an exchange market intermediary (bank, commission agent, exchange house) as if making an international transfer. 

In order to carry out this operation, it will be necessary to make a declaration of change and origin of the resources before the Banco de la Rep├║blica, since the banks are very careful in terms of transfers abroad, having to explain and justify the origin of the money to be able to send it out of the country.

Until today, until today there is no platform or firm authorized by the financial superintendence to operate in the country or to offer services related to the Forex market, so if you are interested you will have to resort to entities that They operate from abroad.

In other words, to this day there are no regulated brokers in Colombia, nor are there any Colombian brokers that are legit according to these criteria. What precautions should be taken when trading the Forex market during different times and time zones? 

The foreign exchange market (Forex) is a market of continuous hours, that is to say, it is necessary to have a series of precautions when operating, since the behavior of the market is not the same in all the hours in which it is going to be traded. operate. This market opens on Sunday night at 23:00 CET and remains operational until it closes on Friday night at 22:00 CET. Among the aspects to take into account: 
  •  - Trading volumes on Sundays are low. 
  •  - Monday is also a quiet day, unless there are elections or other important events during the week. 
  •  - Volatility increases on Tuesday and on average falls again on Wednesday. 
  •  - Thursday and Friday are usually the most volatile days of the week. This is partly due to the fact that some economic announcements such as the ECB interest rate are released on Thursdays, for example, or on Fridays.

The Benefits of Trading When the Market Closes.

Trading forex when the market closes can be advantageous for several reasons. First, the market tends to be less volatile during this time, which can make it easier to identify trends and make informed trading decisions. 

Additionally, trading during this time can allow traders to take advantage of any news or events that may have occurred during the day, as the market may react to these developments when it reopens. Finally, trading when the market closes can be a good option for traders who have other commitments during the day, as it allows them to participate in the market outside of regular business hours.

Tips for Trading During the Closing Session.

The closing session of the forex market can be a great time for traders to make profits. One tip is to focus on currency pairs that are most active during this time, such as the USD/JPY or EUR/USD.

Traders should also pay attention to any news or economic events that may affect the market during this time. It’s important to have a solid trading plan and stick to it, as well as to manage risk by setting stop-loss orders. By following these tips, traders can take advantage of the opportunities presented during the closing session of the forex market.

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