The foreign exchange market, also known as the forex market, is the largest financial market globally, with a 2019 daily trading volume of approximately $6.6 trillion. It is a decentralized market where currencies are traded 24 hours a day, five days a week, except for weekends. Given its global nature, the market operates in different time zones, which makes it challenging to know when it opens and closes. So, what time does the forex market close?
Forex Market Hours
The forex market operates 24 hours a day, five days a week, from Sunday at 5 p.m. Eastern Standard Time (EST) to Friday at 5 p.m. EST. However, it is important to note that not all trading sessions are equal. The forex market is divided into four major trading sessions, which are based on the time zones of the major financial centers around the world. These sessions are:
1. Sydney Session: This session starts at 5 p.m. EST on Sunday and ends at 2 a.m. EST on Monday. It is the least volatile session and is characterized by low trading volumes.
2. Tokyo Session: This session starts at 7 p.m. EST on Sunday and ends at 4 a.m. EST on Monday. It is the second least volatile session and is characterized by moderate trading volumes.
3. London Session: This session starts at 3 a.m. EST and ends at 12 p.m. EST. It is the most volatile session and is characterized by high trading volumes. The London session overlaps with the Tokyo and New York sessions, which makes it even more volatile.
4. New York Session: This session starts at 8 a.m. EST and ends at 5 p.m. EST. It is the second most volatile session and is characterized by high trading volumes. The New York session overlaps with the London session, which makes it even more volatile.
When Does the Forex Market Close?
The forex market closes on Friday at 5 p.m. EST and reopens on Sunday at 5 p.m. EST. However, there are exceptions to this rule. For instance, during major holidays, such as Christmas and New Year’s Day, the forex market may be closed or operate on reduced trading hours. It is important to note that different countries have different holidays, which may affect trading volumes and market liquidity.
Moreover, some brokers may offer extended trading hours, which allow traders to trade outside the regular trading sessions. These extended hours may include pre-market and after-hours trading. Pre-market trading refers to trading that takes place before the regular trading session begins, while after-hours trading refers to trading that takes place after the regular trading session ends. However, trading during extended hours is riskier and may be subject to wider bid-ask spreads and lower liquidity.
Conclusion
The forex market is a 24-hour market that operates five days a week, from Sunday at 5 p.m. EST to Friday at 5 p.m. EST. The market is divided into four major trading sessions based on the time zones of the major financial centers around the world. The sessions are the Sydney, Tokyo, London, and New York sessions. The London session is the most volatile, while the Sydney session is the least volatile. The New York session and the London session overlap, making them even more volatile. During major holidays, the forex market may be closed or operate on reduced trading hours. Finally, some brokers may offer extended trading hours, which allow traders to trade outside the regular trading sessions.
