The foreign exchange market, commonly known as the forex market, is a decentralized market where individuals, institutions, and governments trade currencies. The forex market is open 24 hours a day, five days a week, from Sunday at 5 pm EST until Friday at 5 pm EST. However, the forex market does not open at the same time on Sunday as it does during the week. This article will explain what time forex opens on Sunday and why it is different from other days.
Forex market hours
Before we dive into the opening time of the forex market on Sunday, let’s briefly discuss the forex market’s operating hours. The forex market operates five days a week, starting from Sunday at 5 pm EST until Friday at 5 pm EST. During this time, traders can buy and sell currencies 24 hours a day, except for weekends.
The forex market hours are divided into four main sessions: the Sydney session, the Tokyo session, the London session, and the New York session. The Sydney session opens at 5 pm EST on Sunday and closes at 2 am EST on Monday. The Tokyo session follows, opening at 7 pm EST and closing at 4 am EST. The London session starts at 3 am EST and ends at 12 pm EST. Finally, the New York session opens at 8 am EST and closes at 5 pm EST.
Why forex opens later on Sundays
The forex market is open 24 hours a day, but it does not mean that every market participant can trade during these hours. The forex market operates through a network of financial institutions, including banks, brokers, and dealers, located in different time zones worldwide. The forex market’s opening hours are determined by the interbank market, where large financial institutions trade currencies.
On Sundays, the forex market opens later than usual to allow for the settlement of weekend transactions. During the weekend, banks and other financial institutions exchange currencies in preparation for the upcoming week. These transactions are settled on Monday, which means that the forex market opens later on Sunday to allow for the settlement process.
Another reason why forex opens later on Sundays is that the liquidity in the market is lower during this time. Many financial institutions and traders are not active during the weekend, which can cause the market to be less liquid. As a result, the forex market opens later on Sundays to allow for liquidity to build up before trading begins.
What to expect when forex opens on Sunday
When the forex market opens on Sunday, traders can expect some volatility in the market. The market may experience gaps in price due to the weekend’s news and events. For example, if there was a significant news event that occurred over the weekend, such as a political announcement or economic data release, this could cause a gap in price when the market opens on Sunday.
Traders should also be aware of the liquidity in the market when it opens on Sunday. The forex market may be less liquid during this time, which can result in wider bid-ask spreads and slippage. Traders should exercise caution when trading during this time and be prepared for potential market movements.
Conclusion
The forex market is open 24 hours a day, five days a week, from Sunday at 5 pm EST until Friday at 5 pm EST. However, the forex market opens later on Sundays to allow for the settlement of weekend transactions and to build up liquidity before trading begins. Traders should be aware of the potential volatility and liquidity issues when the market opens on Sunday and exercise caution when trading during this time.
