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A beginner may even feel the trading activity has come to a halt because of Forex brokers who take a break on weekends. However, it is not the case as explained below. In one of our earlier guides Who Trades Forex? It is one of the main reasons for the currency market to remain closed during the weekends. Barring Middle East, across the globe, almost all the financial institutions remain closed during the weekends.
At least, trading desks of most banks will not function. So, if a retail broker still allows trading to happen through its platform, then it could likely face two issues. Firstly, a broker acting as a market maker will have no options to hedge the risk as the major counter-parties banks and other financial institutions are away from the trading desk. Secondly, the broker cannot offer tight spreads due to lack of liquidity. The spread of a currency pair is inversely proportional to its liquidity the spread decreases when major players try to outbid each other to get their trades executed.
So, to compensate for the loss of liquidity, reduce risk, and act as a counter-party to a trade, a Forex broker should increase the spread considerably a spread of 20 pips was normal when OANDA was offering weekend trading before disabling the feature.
An increase in spread would discourage retail traders from entering a trade. Further, an FX broker needs to employ some people to monitor the situation during the weekends. Additionally, to keep the systems working during weekends, a broker will incur additional infrastructure related costs power, uplink, and so on.
Ultimately, the company may not have much to gain by offering weekend trading. Additionally, if the market opens with a large gap on the subsequent day, then it may result in a huge loss to the broker. On a usual clock, an hour hand makes a full circle twice in 24 hours, while on the trading floor clocks it makes a full circle once a day.
As for the minute and second hands, they follow the usual trajectory and complete a circle in 60 minutes and 60 seconds respectively. Forex trading sessions differ from each other. Firstly, the working hours significantly affect the nature of trading: at night, quotes move slowly, while during the day, their volatility may increase considerably.
Secondly, trading sessions vary depending on the currency pairs and their volatility. Trading in the Forex market kicks off with the opening of the Pacific trading session, the least volatile one. During this session, the quotes move very slowly and any sharp fluctuations are unlikely to occur.
This is the calmest session of all. Trading unfolds quietly and the currency pairs' quotes barely move. Experienced traders refrain from working during this period, although they continue to monitor market movements, the formation of new trends, and price reversals. Beginners, on the contrary, are very active in this session as the risk is minimal. This trading session provides a good opportunity to learn and make the first transactions on Forex. Besides, some automated trading systems configured to flat trading can prove to be efficient during the Pacific session.
However, there are some periods of high volatility when the US Federal Reserve System announces the results of its regular policy meeting. Traders start reacting to the result of the meeting and the quotes start fluctuating in response. Importantly, the Australian and New Zealand dollars are the national currencies of the countries of the Pacific region states. In the Asian trading session, the market wakes up and currency quotes start moving faster.
The intense activity is usually seen in the early hours of the session when important economic reports are published. At this time, Japan, Australia, and New Zealand often unveil their macroeconomic statistics. As a rule, when the pair fluctuates drastically in the American session, it usually consolidates in the Asian one. The liquidity during the Asian session is low. Many currency pairs are trading within narrow ranges preparing for stronger movements in the subsequent trading hours.
The Asian stock exchanges often set the trend for the rest of the day. The Asian trading session is characterized by moderate volatility, and any trading style can be applied here. Taking into account the slow pace of the price movements, the work of a trader reminds one of a hunter. They have to wait long and patiently for their prey but one well-aimed shot can bring a significant profit. The European trading session is one of the most concentrated and most volatile sessions in the forex market.
During the European trading hours, market participants conduct most of their deals as the trade volumes are large. Notably, the majority of sustainable trends in the foreign exchange market occur during the working hours of European banks and stock exchanges. Moreover, false signals are frequent in this period. At times like that, European traders monitor the market, try to find the congestion of stop orders, and spot support or resistance levels.
The beginning of the European session is relatively calm. All major price movements develop at the opening of the London Stock Exchange. During this time, volatility is the highest and major currency pairs are most actively traded. Trading reaches its peak at the start and end of the European session. Meanwhile, afternoon trading is less intensive, as traders take a short break. Price fluctuations occur at the end of the session.
The forex market is available for trading 24 hours a day except for weekends. The forex market is decentralized and driven by local sessions. The U.S. forex market closes on Friday at 5 pm EST and opens on Sunday at 5 pm EST.1 Although the market is only closed to retail traders, forex trading takes. Trading hours on weekend forex pairs are from 8am on Saturday to pm on Sunday (UK time). Any positions open at pm (UK time) on a Sunday will roll over.