Can I Trade a Currency When Its Main Market Is Closed?

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Can I Trade a Currency When Its Main Market Is Closed?

Global currencies are exchanged in the forex market at all hours of the day and night. The forex market is very liquid, and the rising availability of modern technology and information processing has only increased the number of players and transaction volume.

Key Takeaways

  • Currency trades on the forex market 24 hours a day, therefore you may frequently make an FX deal at any time.
  • This is accomplished when trade moves from one major market in one time zone to another during the day (e.g., from London to New York to Sydney to Tokyo).
  • However, retail traders are often restricted to trading just Monday through Friday.
  • Because markets may change at any time, many forex day traders avoid holding holdings overnight.

Non-stop Trading

Although many overseas markets are closed when North American ones are open, foreign currency trading continues. While most currency trading happens while the currency’s primary market is open, many other banks throughout the globe retain foreign currencies that may be exchanged when the main market is closed.

North American markets, for example, are open while Japanese markets are closed, but North American traders may still buy and sell Japanese yen via their brokerages and banks. However, while the Japanese market is open, the market for the Japanese yen is more liquid.

Market hours will overlap throughout the globe, although it is normally the case that key markets at a given time will be:

  • 8 a.m. to 5 p.m. in New York (EST)
  • Tokyo: 7 p.m. to 4 a.m. (EST)
  • 3 p.m. to 12 a.m. in Sydney (EST)
  • 3 a.m. to 11 a.m. (EST) in London
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Forex Market Hours in GMT. ForexMarketHours.com

Drawbacks to Trading When a Currency’s Market Is Closed

Some investors advise against trading while a currency’s market is closed. A lot of trading positions are closed at market closure, which may produce volatility in the currency markets and cause prices to fluctuate wildly. When markets open, the same thing might happen. Traders are starting positions now, maybe because they do not want to hold them over the weekend.

Holding trading over the weekend is not suggested unless you are using a long-term strategy that includes holding investments for weeks or months.

Weekend Trading

The currency market in the United States shuts on Friday at 5 p.m. EST and reopens on Sunday at 5 p.m. EST. Although the market is only closed to retail dealers on weekends, currency trading goes occur via central banks and other entities. As a result, there is often a price gap between Friday’s close and Sunday’s start. This disparity is referred to as a gap.

Traders who do not want to risk gapping will close their positions on Friday evening or apply stops and limits to control this risk.

In some nations with volatile markets, a bank may fail in the span of a weekend. This might imply that your position will have shifted drastically by the time the market reopens on Sunday.

Special Considerations

Certain currencies have very low rates of demand for exchange. As a consequence, these currencies may be difficult to trade and are often only available via specialized institutions. Because currency trading does not take place on a regulated exchange, there is no guarantee that someone will meet your deal parameters.

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However, the world’s biggest currencies, such as the US dollar (USD), euro (EUR), and Japanese yen (JPY), are among the most readily accessible.

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