The FOREX market is the largest financial market in the world with its own opening time very different from others.
Before now, you could only trade or exchange currencies physically but today, you can basically trade anywhere, anytime just by using your phone and the Internet.
Trading on the foreign exchange is not done at one central location but is conducted between participants by phone and electronic communication networks (ECNs) in various markets around the world.
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The market is open 24 hours a day in different parts of the world, from 5 pm EST on Sunday until 4 pm EST on Friday. At any point in time, there is at least one market open, and there are a few hours of overlap between one region’s market closing and another’s opening.
Round-the-clock trading
The international scope of currency trading means there are always traders across the globe who are making and meeting demands for a particular currency.
Currency is also needed around the world for international trade by central banks, and global businesses. Central banks have particularly relied on foreign-exchange markets since 1971 when fixed-currency markets ceased to exist because the gold standard was dropped. Since that time, most international currencies have been “floated” rather than tied to the value of gold.
Suggested Read: Risk & Profitability in the Foreign Exchange: Day 2 into the FOREX Market
Participants in FOREX
Europe is comprised of major financial centers such as London, Paris, Frankfurt, and Zurich. Banks, institutions, and dealers all conduct FOREX trading for themselves and their clients in each of these markets. Here, we have FOREX traders, Account Managers, and Investors.
But here’s the question.
“Where do you belong?”
Are you a Trader, Account Manager, or Investor, and why not an introductory broker? All these are different ways to make money in the FOREX market.
Every day of FOREX trading starts with the opening of the Australasia area, followed by Europe, and then North America. As one region’s markets close another opens, or has already opened, and continues to trade in the FOREX market. These markets will often overlap for a few hours, providing some of the most active periods of FOREX trading.
NB: In Cameroon, we trade by following the London time zone which is just an hour different from our time zone.
For example, if a FOREX trader in Australia wakes up at 3 am and wants to trade currency, they will be unable to do so through FOREX dealers located in Australasia. They can, however, make as many trades as they want through European or North American dealers.
The FOREX market can be split into three main regions: Australasia, Europe, and North America, with several major financial centers within each of these main areas.
Understanding FOREX Market Hours
International currency markets are made up of banks, commercial companies, central banks, investment management firms, hedge funds, as well as retail FOREX brokers and investors around the world. Because this market operates in multiple time zones, it can be accessed at any time, except for the weekend break.
The international currency market isn’t dominated by a single market exchange but involves a global network of exchanges and brokers around the world. FOREX trading hours are based on when trading is open in each participating country. While the timezones overlap, the generally accepted timezone for each region are as follows:
The two busiest time zones are London and New York. The period when these two trading sessions overlap (London afternoon and New York morning) is the busiest period and accounts for the majority of volume traded in the $6 trillion a day market.
It is during this period where the Reuters/WMR benchmark spot foreign exchange rate is determined. The rate, which is set at 4 pm London time is used for daily valuation and pricing for many money managers and pension funds.
While the FOREX market is a 24-hour market, some currencies in several emerging markets, are not traded 24 hours a day.
The seven most-traded currencies in the world are the U.S. Dollar, the Euro, the Japanese Yen, the British Pound, the Australian Dollar, the Canadian Dollar, and the New Zealand Dollar, all of which are traded continuously while the FOREX market is open.
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