Literally speaking, Forex is an online financial market that trades twenty-four (24) hours (non-stop). I used the word, “literally” because, there are some aspects of the market that close while others remain open. This is what I am going to explain in this lesson, to help you understand the market and the forces behind the market.
Time Zone is a very critical factor in Forex. There are different time zones in the world, which makes it possible that other people would be sleeping while others are awake. For instance, it might be 1:00pm in Nigerian the same time it is 8:00am in America. This affect all activities in the global market including the Forex. Every country carry on their businesses during their business hours, which are usually between 8am to 5pm for most countries. Therefore, some countries might be closing their businesses while others are beginning their own. We are going to use Nigerian Time (GMT +1) in our lesson.
The Forex Market opens by 10pm on Sunday night and closes on 10pm Friday night.
Due to the difference in time zones, the Forex has different Trading Sessions based on the location of the different Central Markets where Forex are traded. They are as follows:
- The Sydney Market: This market is located in Sydney, Australia. It opens 10:00pm and covers part of the Asian Trading Session.
- The Tokyo Market: This market is located in Tokyo Japan. It opens by 1:00am and covers part of the Asian Trading Session.
- The Frankfurt Market: This market is located in Frankfurt, Germany. It opens at 7:00am and covers the European Trading Session.
- The London Market: This market if located in London, England. It opens at 8:00am and covers the European Trading Session.
- The New York Market: This market is located in the US. It opens at 1:00pm and covers the North American Trading Session.
Once the market opens on 10:00pm, it remains open until 10:00pm on Friday Night. This means that the markets are closed during the weekend and open during the weekdays. All instruments are traded when the markets are open but when the markets are closed, only cryptocurrencies trade (even on weekends)
In the actual fact, the market does not close, it just that the Brokers close their servers so that we (retail dealer do not participate)
Also note that each currency trade heavily during its trading session for obvious reasons.
With this knowledge, you can now appreciate what Forex is all about. The next lesson would be on how you can participate actively in this market.