Does forex have a time limit?

As you may already know, the pasaran forex is the largest financial market in the world that attracts everyone from small retail traders to large financial institutions, banks, and even governments. One of the most distinct aspects of this particular market is that it is decentralised and operates 24/5, i.e. 24 hours a day, 5 days a week (Monday to Friday), depending on time zone.

In other words, unlike the stock markets which have set opening and closing times, forex trading essentially kicks off on Sunday evenings with the Asian session and concludes on Friday evenings when the New York session closes. This continuous trading schedule ensures that a market is always active somewhere, enabling traders to respond quickly to global developments as they occur.

Zero time constraints?

So, if the market is always open, with the exception of weekends, you’re pretty much able to trade forex whenever you want, with no time limit, correct? Theoretically, yes. But there are factors a forex trader must consider as they dive into this space.  

Sydney session

The global trading day kicks off with the Sydney market opening at 7:00 AM local time (4:00 PM EST, 9:00 PM UTC) and wrapping up at 4:00 PM local time (1:00 AM EST, 6:00 AM UTC).

Tokyo session

Following Sydney, the Tokyo session comes online at 9:00 AM local time (7:00 PM EST, 12:00 AM UTC) and remains active unti close at 6:00 PM local time (4:00 AM EST, 9:00 AM UTC).

London session

As Tokyo winds down, the London market  opens at 8:00 AM local time (2:00 AM EST, 7:00 AM UTC), staying open until 5:00 PM local time (11:00 AM EST, 4:00 PM UTC).  

New York session

The trading day concludes with the New York market, which begins at 8:00 AM local time (8:00 AM EST, 1:00 PM UTC) and closes at 5:00 PM local time (5:00 PM EST, 10:00 PM UTC).

International time zones

For one, while the forex market is open 24 hours a day, there are time zones to consider. This is because the market is essentially divided into four primary sessions: New York, Tokyo, Sydney and London. These sessions open and close at different times, resulting in overlaps, giving each session its own unique characteristics and liquidity levels.

Weekend gap

While the forex market is open 5 days a week, as we’ve already mentioned, it shuts on the weekend, creating what is called the “weekend gap risk”. Should market moving events occur during this period, e.g., an unanticipated economic news release, the outbreak of war, an environmental disaster, etc, the market may open on Sunday with aggressive price gaps which could potentially incur losses or gains for traders, particularly those that have held positions over the weekend. It is for this reason that many traders choose to exit trades when the trading day concludes on a Friday or hedge against potential weekend gaps.

Trading strategies

Just because the forex market is open 5 days a week, 24 hours a day, doesn’t mean that every session is suited to your particular trading style. For instance, a scalper might prefer the high volatility of the London-New York overlap, which is generally considered the busiest trading session with the highest trading volumes.

A swing trader may opt to trade during less active periods between sessions. It is only by having a good understanding of the attributes and volatilities of each session that you will be able to align your strategi dagangan or style with the most suitable market for you.

Economic news and releases

Trading hours become even more important when considering the timing of major economic news and releasees. This includes central bank announcements, GDP, inflation and interest rates, employment/unemployment reports, etc. It also takes into account factors like geopolitical tensions, environmental disasters, pandemics, and so forth. For example, U.S. economic data is often released during the New York session, which can cause significant price fluctuations in USD-related currency pairs.

Traders who pay attention to these timing factors can potentially better position themselves to capitalise on these opportunities, or take appropriate measures to reduce risks. One tool that traders use to stay informed is an Kalendar Ekonomi, much like the one that IronFX offers to its traders. This calendar provides real-time updates on financial events and economic indicators to help global traders make informed decisions.

This includes key drivers of currency markets like GDP, interest rates, unemployment figures, central bank minutes, and inflation measures like Consumer Price Indices (CPIs).

Trading psychology and handling your emotions

Forex trading is a challenging endeavour, regardless of the trading session you pick or the times you choose to trade. One can incur significant risk which often times leads to considerable losses if not managed properly.

One of the major influences on trading outcomes, be this during the Tokyo session, Sydney session, New York session or London session, is human emotion. Feelings like greed, fear, anxiety, arrogance, impulsion or even FOMO, all have the power to drive the decision making process in a way that lacks solid reasoning. Feelings can overwhelm even the most rational, disciplined trader.

Which is  what makes trading psychology so important. Trading psychology refers to the extent that emotions can impact financial decision making. And if one doesn’t have a good handle on their emotions, the likelihood of adverse trading outcomes increases exponentially. Learning how to handle your range of emotions comes with practice. Deciding on the best approach to acquire emotional control differs from person to person.

For some it may require simply stepping away from their trading platform for a few minutes to calm down. For others, it may look like daily mindfulness exercises or going to the gym. Pick a method that works best for you and start regaining control over your feelings to improve your chances for success in your chosen trading session.

Longevity in the forex trading space

For someone looking at forex trading as a long-term undertaking, the question of time limit takes on a new meaning. This is because a long-term vision looks beyond time limitations or constraints, and focuses just as much on having a proper trading plan in place, adopting effective risk management measures, and engaging in some form of ongoing learning to stay educated and informed.

As far as a trading plan is concerned, ensure that this takes into account your goals, budget, and the level of risk you’re willing to incur. It should also consider your trading style as this will impact your choice of currency pairs and trading session. Additionally, the plan must also integrate the risk management tools you intend on using to safeguard your capital.

This might be stop loss orders, take profit orders, diversification, hedging, position sizing, etc. Remember, managing risk is a crucial component of forex trading and needs to be taken seriously. To facilitate longevity in the forex trading space, you must also invest time in some form of ongoing learning.

Markets evolve, technologies advance, and strategies change – the only way to keep ahead of either is to keep yourself informed with information and data. Most reputable brokers offer comprehensive learning material to support this learning journey, be it via blogs, e-books, videos, podcasts, seminars, webinars, etc.

Trading with IronFX

Becoming an IronFX trader means gaining access to a high-quality, flexible trading experience, multiple asset classes, an extensive range of account types, and fast trade execution. Through this international broker with clients across the globe, you’ll also be able to enjoy seamless withdrawals and deposits, and market access via the MetaTrader 4 (MT4) trading platform, arguably one of the world’s most popular trading systems amongst global traders. The IronFX Academy also offers an abundant source of educational resources to boost one’s skills and acquire fundamental trading insights.

Disclaimer:
This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked in this communication.