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What time of the day is forex closed for one hour?

The forex market is a global marketplace that operates 24 hours a day, five days a week. It is the largest financial market in the world, with an average daily turnover of over $5 trillion. Despite being an around-the-clock market, there is a one-hour window each day when forex is closed. This time period is known as the daily rollover.

The daily rollover occurs from 5 pm EST to 6 pm EST. During this hour, the forex market is closed to retail traders. However, banks, central banks, and other financial institutions continue to trade currencies during this time.

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The reason for the daily rollover is that the forex market operates on a T+2 settlement cycle. This means that when a trade is executed, the settlement of the transaction takes two business days to complete. For example, if a trade is executed on Monday, the settlement date would be Wednesday. The daily rollover occurs at 5 pm EST because it marks the end of the trading day in North America and the beginning of the trading day in Asia.

During the daily rollover, any trades that are open will be rolled forward to the next business day. This means that the settlement date for these trades will be pushed forward by one day. For example, if a trade is executed on Friday and is still open at 5 pm EST, the settlement date will be pushed forward from Tuesday to Wednesday, since Monday is a holiday.

The daily rollover can also affect swap rates. Swap rates are the interest rates that are paid or received for holding a position overnight. During the daily rollover, swap rates may be adjusted to reflect changes in interest rates and other factors.

Although the forex market is closed to retail traders during the daily rollover, there are still some activities that can be carried out during this time. For example, traders can analyze market data and news releases that have occurred during the day. They can also review their trading strategies and make adjustments as needed.

It is important to note that although the daily rollover is only one hour, it can have a significant impact on a trader’s positions. This is especially true for traders who trade on a short-term basis, as they may need to close their positions before the daily rollover in order to avoid any potential negative effects.

In conclusion, the daily rollover is a one-hour period each day when the forex market is closed to retail traders. This time period is important for settlement of trades and adjusting swap rates. Although the forex market is closed during the daily rollover, traders can still analyze market data and review their trading strategies. It is important for traders to be aware of the daily rollover and take it into account when executing trades.

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