The foreign exchange market, better known as forex, is one of the most dynamic financial markets globally, operating 24 hours a day, five days a week. Despite its operational nature, forex trading experiences a slowdown at 10:00 am EPT (Eastern Time) every day. This phenomenon has intrigued both novice and experienced traders for years, with many wondering what causes the forex market to slow down at this precise time. In this article, we will delve into the reasons behind the forex market’s 10:00 am EPT slowdown.
The forex market operates on a global scale, with major financial centers such as London, New York, Tokyo, and Sydney being the main players. Forex trading commences at 5:00 pm EST on Sunday and runs continuously until 5:00 pm EST on Friday. During this period, traders can engage in buying or selling currencies, with the market operating round the clock. However, the trading volume varies throughout the day, with some hours being more active than others.
One of the reasons why the forex market slows down at 10:00 am EPT is due to the time difference between the different financial centers that operate in the market. During this time, the London and Tokyo sessions are closing, while the New York session is just starting. The London session is a crucial player in the forex market, accounting for approximately 35% of the total daily trading volume. As such, when the London session closes, there is a reduction in trading activity, leading to a slowdown in the forex market.
Another factor that contributes to the forex market’s slowdown at 10:00 am EPT is the release of economic data. Governments and financial institutions release critical economic data such as GDP, employment reports, and inflation rates, among others, at specific times. These data releases can have a significant impact on the forex market, causing fluctuations in currency values. As such, traders usually avoid trading during data releases to avoid incurring significant losses due to market volatility.
Furthermore, traders also take a break during the 10:00 am EPT slowdown, leading to reduced trading activity. Traders need to take a break to clear their heads, review their trading strategies, and analyze market trends. During this time, traders can also attend to other personal or business matters, leading to a reduction in market activity.
Finally, the forex market’s slowdown at 10:00 am EPT can also be attributed to the fact that most traders have already made their trades for the day. The opening hours of the forex market are usually the most active, with traders seeking to capitalize on market volatility. As the day progresses, traders tend to reduce their activity, leading to a slowdown in the market.
In conclusion, the forex market’s slowdown at 10:00 am EPT can be attributed to various factors, including the time difference between the different financial centers, the release of economic data, traders taking a break, and traders having already made their trades for the day. Understanding these factors is crucial for traders looking to develop effective trading strategies and make informed trading decisions. By doing so, traders can maximize their profits and minimize their losses in the forex market.
