The foreign exchange market or Forex is a decentralized market that operates 24 hours a day, five days a week. It is the largest financial market in the world with over $5 trillion traded daily. With Forex, traders can buy or sell currencies at any time of the day, from anywhere in the world.
When trading Forex, one of the common questions traders ask is, “When the market closes in Forex, do I lose my trade?” The simple answer to this question is no. The Forex market does not close, but it operates continuously throughout the week, except for weekends.
Forex trading hours
Forex trading starts on Sunday at 5:00 pm EST when the Asian session opens, and it ends on Friday at 5:00 pm EST when the New York session closes. The Forex market operates in four major time zones: Sydney, Tokyo, London, and New York. These are the main trading centers where the majority of Forex transactions take place.
The trading hours in each time zone are as follows:
1. Sydney session: 5:00 pm to 2:00 am EST
2. Tokyo session: 7:00 pm to 4:00 am EST
3. London session: 3:00 am to 12:00 pm EST
4. New York session: 8:00 am to 5:00 pm EST
These trading hours are not fixed, and they may change depending on various factors such as political events, holidays, and daylight saving time.
How Forex trading works
Forex trading involves buying and selling currency pairs. When you buy a currency pair, you are essentially buying the base currency and selling the quote currency. For example, if you buy EUR/USD, you are buying Euros and selling US dollars. If you sell the same pair, you are selling Euros and buying US dollars.
The Forex market is highly volatile, and currency prices can change rapidly within seconds. Traders use various trading strategies, such as technical analysis and fundamental analysis, to predict the direction of the market and make profitable trades.
When you open a trade in Forex, you are essentially speculating on the price movement of a currency pair. If your prediction is correct, you make a profit, and if it is incorrect, you make a loss.
Do you lose your trade when the market closes?
As mentioned earlier, the Forex market operates continuously throughout the week, except for weekends. When the New York session closes on Friday at 5:00 pm EST, the Sydney session opens on Sunday at 5:00 pm EST.
During the weekend, there is no trading activity in Forex, but your trades are still open. The value of your trades may fluctuate during this period, depending on various factors such as news events, market sentiment, and economic indicators.
If you have a profitable trade, it will remain profitable even when the market is closed. However, if you have a losing trade, it will also remain losing. The value of your trade may change during the weekend, but the trade remains open until you close it or it reaches the stop loss or take profit level.
It is important to note that during the weekend, the liquidity in the Forex market is low, and the spreads may widen. This means that the difference between the bid and ask price may increase, making it more expensive to buy or sell a currency pair.
Conclusion
In summary, when the market closes in Forex, you do not lose your trade. The Forex market operates 24 hours a day, five days a week, and your trades remain open even when the market is closed. The value of your trades may fluctuate during the weekend, but the trade remains open until you close it or it reaches the stop loss or take profit level. It is important to understand the trading hours and the impact of low liquidity during the weekend to make informed trading decisions.
