The foreign exchange market, also known as forex or FX, is a decentralized global market where currencies are traded. It is open 24 hours a day, five days a week, allowing traders to conduct transactions at any time from anywhere in the world. In forex trading, the concept of daily candles is important to understand as it helps traders analyze price action and make informed decisions. In this article, we will delve into the question of what time do daily candles close in forex.
The Basics of Forex Candlesticks
Candlestick charts are commonly used in forex trading to display the price movements of currency pairs over a certain period. Each candlestick represents a specific time frame, such as one minute, five minutes, or one hour. The candlestick has two main parts: the body and the wicks or shadows. The body shows the opening and closing prices of the currency pair, while the wicks or shadows indicate the highest and lowest prices reached during the time period.
Daily candles, as the name suggests, represent a full day of trading activity. They are created by aggregating the price movements of a currency pair over a 24-hour period, from the opening of the market in one time zone to its close in another time zone. The closing time of daily candles varies depending on the time zone of the forex market being traded.
Forex Market Time Zones
The forex market is not centralized, and trading takes place in different time zones around the world. The major forex trading centers are located in London, New York, Tokyo, and Sydney. These markets operate on a 24-hour basis, but their opening and closing times vary depending on the time zone.
London is the largest forex trading center, accounting for around 30% of the global forex trading volume. The London session opens at 8:00 AM GMT and closes at 4:00 PM GMT. This means that the daily candles for major currency pairs such as EUR/USD, GBP/USD, and USD/JPY close at 4:00 PM GMT.
New York is the second-largest forex trading center, accounting for around 20% of the global forex trading volume. The New York session opens at 12:00 PM GMT and closes at 8:00 PM GMT. This means that the daily candles for major currency pairs close at 8:00 PM GMT.
Tokyo is the third-largest forex trading center, accounting for around 10% of the global forex trading volume. The Tokyo session opens at 12:00 AM GMT and closes at 9:00 AM GMT. This means that the daily candles for major currency pairs close at 9:00 AM GMT.
Sydney is the fourth-largest forex trading center, accounting for around 5% of the global forex trading volume. The Sydney session opens at 10:00 PM GMT and closes at 7:00 AM GMT. This means that the daily candles for major currency pairs close at 7:00 AM GMT.
It is important to note that the opening and closing times of the forex market may be affected by daylight saving time. During daylight saving time, the trading hours may be shifted by one hour in some countries, leading to changes in the closing times of daily candles.
Why Daily Candles Matter in Forex Trading
Daily candles are an important tool for forex traders as they provide a clear picture of the price action over a full day. By analyzing the daily candles, traders can identify trends, support and resistance levels, and potential entry and exit points for trades.
For example, if a trader notices that the daily candles for EUR/USD have been consistently closing higher for several days, they may interpret this as a bullish trend and look for opportunities to enter long positions. On the other hand, if the daily candles for USD/JPY have been consistently closing lower for several days, they may interpret this as a bearish trend and look for opportunities to enter short positions.
Conclusion
In conclusion, the closing time of daily candles in forex trading varies depending on the time zone of the market being traded. The major forex trading centers in London, New York, Tokyo, and Sydney have different opening and closing times, which determine the closing time of daily candles for major currency pairs. Daily candles are an important tool for forex traders as they provide a clear picture of the price action over a full day and can help identify trends and potential entry and exit points for trades.
