Why Does the Forex Trade 24 Hours a Day?

Forex Trading Hours


Many investors are baffled at the idea that the forex trading hours are from Sunday 5pm EST through Friday 4pm EST.  Every other major stock market has a set time for which they trade, yet the forex market appears to have endless trading opportunities.
Why 24 Hour Trading?

Why 24 Hour Trading?


The forex market is hard to comprehend when an investor looks at the amount of money that is traded each day.  Currently there is over 1.5 trillion dollars that exchanges hands on a daily basis.  A large part of the forex trading volume is from large banking institutions and central banks who need currency from around the world in order to provide stable markets and conduct business operations.  This process allows for a country to assess the value of its currency relative to other global powers.  This provides investors and businesses seeking to do business in foreign countries the ability to determine the economic health of the host nation.  So, since this is a global market, it is required that the market stay open 24 hours a day in order to accommodate the numerous participants.  The forex market is able to maintain these trading hours because it is comprised of a network of computers versus a standalone exchange.

Best Forex Market Hours to Trade


While the forex market is open 24 hours a day, the best time to trade is when the London markets are winding down and overlap with the U.S. market.  This trading block occurs between 11:00 GMT and 16:00 GMT.  This produces a 5 hour window from which the most volume on the FX occurs.  The heavy liquidity produces a number of forex arbitrage opportunities and trading breakouts from which to make money.  Most active traders have developed their trading strategies for this time slot.  Similar to day traders in equity markets who only trade certain time slots, the top forex players understand that while the market is open 24 hours per day, only a small portion of that time can be used to make money.
Tim Ord
Ord Oracle

Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...

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