Forex trading is a 24-hour business because it’s an international market, with trades taking place across various time zones around the world. There is no physical exchange in any set location, making it possible for trading to happen around the clock. Forex can be traded 24 hours a day, between Sunday night and Friday evening (UK time).
What is forex trading?
Forex trading is the buying and selling of one country’s currency in exchange for another with the aim to make a profit. It is also referred to as currency trading. Forex is one of the most widely traded markets worldwide. The forex market is a decentralised market, so trades happen over the counter. This is otherwise known as over-the-counter (OTC) trading.
The major parties in this market are huge international banks and large corporations. Foreign dealers engage in trades of multi-million dollar contracts. With the advent of online trading platforms, it is now also possible for individual traders to open an FX trading platform with a broker and speculate on currencies online.
How large is the forex market?
The forex market is the biggest and most liquid market in the world. The market consists of corporations, governments, banks, hedge funds, and investment management firms. It also includes retail forex brokers and investors. Every single day, trillions of dollars pass through the forex market. This is a much larger trade volume than any other financial market in the world.
Transactions take place around the world electronically. The market does not have a central or physical location; it is decentralised. The highly liquid nature of the market attracts more traders.
What are the main currency pairs?
Currencies only trade in pairs. The most commonly traded currency is the US dollar. Any currency pair involving the US dollar is known as a major currency pair. Examples of popular currency trading pairs include the USD/EUR, GBP/USD and GBP/EUR. Other popularly traded currencies include the British pound, Swiss franc, euro and Canadian dollar. Next are the Japanese yen, Australian dollar and New Zealand dollar. These are liquid currencies with economic stability. They are in high demand for trade.
When are the major FX markets open?
Forex is open for trade 24 hours a day, Monday through Friday in the UK. Forex trades follow the time zones of major FX markets globally. Trading hours open in one major forex market as another market closes. The Sydney market opens when the New York market closes. Then the Tokyo market opens as the Sydney market closes. The London market opens at the time Tokyo closes. Then the New York market opens again as the London market is closing. Sydney, New York, Tokyo, and London are the major forex markets.
The market hours overlap to allow brokers and traders to trade 24 hours a day. Each continent has central banks that are always open to allow trading to go on.
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