Forex trading, also known as foreign exchange trading, is the buying and selling of currencies in the global market. It is a popular way of making money through speculation on currency fluctuations. However, there are times when forex is not trading. In this article, we will explore when forex is not trading and what factors affect the forex market.
Forex trading is a 24-hour market, meaning it is open for trading around the clock. However, there are times when the market is not actively traded, and this affects the liquidity and volatility of the currency pairs. The forex market is divided into four major trading sessions: the Sydney session, the Tokyo session, the London session, and the New York session. Each session has its own trading hours, and traders need to be aware of the times when the market is active and when it is not.
Weekends
The forex market is closed on weekends. The last trading day of the week is Friday, and the market reopens on Sunday afternoon in the United States. During the weekend, traders cannot trade, and any news or events that occur during this time will have an impact on the market when it reopens.
Bank Holidays
The forex market also closes on bank holidays. These are national holidays that are observed in different countries around the world. For example, in the United States, the market is closed on Independence Day, Thanksgiving Day, and Christmas Day. In the United Kingdom, the market is closed on Boxing Day, New Year’s Day, and Easter Monday. During bank holidays, the market is not trading, and traders need to be aware of these dates to avoid placing orders during this time.
Low Liquidity Periods
There are times during the trading day when the market is less active, and the liquidity of the currency pairs is low. This occurs during the overlap of two trading sessions or during lunchtime in major financial centers. For example, the overlap of the Tokyo and London sessions occurs from 3:00 am to 4:00 am EST, and the overlap of the London and New York sessions occurs from 8:00 am to 12:00 pm EST. During these periods, the market is not trading actively, and the spread between the bid and ask price widens, making it difficult for traders to enter and exit trades.
Major News Releases
Major news releases, such as employment data, inflation figures, and central bank announcements, can affect the forex market. During these events, the market can be volatile, and the liquidity of the currency pairs can be low. Traders need to be aware of the times of these events and the potential impact they can have on the market. It is advisable to avoid trading during major news releases or to use a trading strategy that can handle the volatility.
Conclusion
Forex trading is a 24-hour market, but there are times when the market is not actively traded. Traders need to be aware of the times when the market is closed, such as weekends and bank holidays. They also need to be aware of the low liquidity periods and the times of major news releases that can affect the market’s volatility. By understanding when forex is not trading, traders can avoid placing orders during these times and minimize their risk exposure.
