Can I trade forex 24 hours?

The forex market is decentralised, meaning it operates via an international network of retail traders, banks and other financial institutions. The market is open 24 hours a day, 5 days a week, with trading taking place across different time zones, essentially kicking off with the opening of the Sydney session on Sunday evening. The market continues to stay open until Friday when the New York session closes in the evening.   

A closer look at the 4 primary trading sessions

The markets is essentially divided into 4 main sessions, Sydney, Tokyo, London, and New York.

Sydney session (9pm UTC – 6am UTC)

The first of the four sessions to kick off is the Sydney session which opens on Sunday evening, and plays a crucial role in setting the initial market tone. Currency pairs impacted during this session typically include the Australian and New Zealand dollars.

Tokyo session (12am UTC – 9am UTC)

The 2  session to open is the Tokyo session which experiences considerable trading activity, especially in JPY currency pairs. The Tokyo session is relatively liquid with volatility typically somewhat moderate in comparison to the London and New York sessions.

London session (7am UTC – 4pm UTC)

The London session is up next and it’s when the 外汇市场 comes alive, characterised by significant market activity. This session overlaps with both Tokyo (at open) and New York (a close of trading day), creating pockets of heightened volatility and a number of trading opportunities for market participants.

New York session (1pm UTC – 10pm UTC)

The last session to open is the New York session. The overlap between this session and London results in one of the most volatile and liquid periods of the day. The US dollar is involved in more than ¾ of all forex trades, making this session vital for traders worldwide.

What are the psychological implications?

One of the biggest challenges that comes with having the ability to trade 24/5 is managing the psychological aspect of trading. Just because the market operates around the clock, doesn’t mean someone has the physical capacity to execute trades 24 hours a day, nor the mental capacity to cope with the stress and challenges that each session evokes. How then does one mitigate these factors?

1. Develop a trading routine and stick to it. Ensure that this routine caters to your specific schedule and goals, as well as desired trading session and the time zone in which you are located.
2. Pick a 交易策略 that is best suited to the session you wish to trade in. For someone looking to capitalise on frequent price movements like a scalper, trading in sessions that offer higher levels of liquidity and volatility is key.
3. Try to avoid overtrading. Just because the market is always open doesn’t mean you always have to trade. Overtrading often times leads to increased stress, adverse trading decisions, and unanticipated losses. To avoid the temptation, consider setting time limits for each session and sticking to them.
4. Consider journalling your trades, noting what positions you’ve opened and closed, and the rationale behind those decisions. Additionally, remember to note your behaviours too. By having a historical record to look back on, you’ll not only be able to identify strengths and weaknesses in your trading approach and make any necessary adjustments where needed, you’ll also be able to keep track of what behaviours or feelings triggered certain trading decisions. In that way, you’ll be able to recognise those triggers going forward, and take the necessary steps to avoid having them overshadow objective reasoning.
5. Monitor the news 和 engage in ongoing learning to ensure that you are constantly informed, thereby increasing confidence and giving you the ability to react to market moving events as they happen.   
6. International traders can make use of an 经济日历 to monitor major financial news and releases and economic indicators, and better plan their trades. Some of the most important economic indicators for forex trading include GDP (Gross Domestic Product), Non-Farm Payroll (US), unemployment rate, inflation, consumer confidence, central bank rate decisions, retail sales, and IPI (Industrial Production Index) (US). These indicators are said to have the biggest impact on the forex market, therefore monitoring them to be able to quickly react to sudden market fluctuations is vital.
7. As far as ongoing learning is concerned, there are a myriad of tools available online. Forex brokers in particular will often give their traders access to trading related educational resources to widen their scope of knowledge and refine their skills. These include blogs, videos, podcasts, seminars, webinars, e-guides, and many more.

Automated trading, a useful tool for 24 hour trading

Automated trading (also known as algorithmic trading) is a go-to tool by traders looking to trade the market 24/5. One of MetaTrader 4’s strongest features, automated trading can help you execute trades based on pre-set criteria, allowing you to participate in the market even when you’re not at your desk.

More specifically, MT4’s algorithmic trading allows you to develop, test and apply Expert Advisors and technical indicators of any complexity. At its core, it uses MQL4 object-oriented programming language for developing trading strategies, offering high efficiency, flexibility, and robust functionality. Other advantages of automated trading:

• Automated programs can analyse market conditions and execute trades within milliseconds, capitalising on trading opportunities much faster than human traders.
• Automated trading reduces the influence of emotions on trading outcomes and ensures consistent decision making.
•  Automated strategies can be backtested against historical data to assess their performance before applying it in live trading.
• Automated trading can take place around the clock, monitoring markets and entering/exiting positions, with little to no intervention by the trader.

This is not to say that automated trading is without fault. Mistakes happen which is why effective risk management measures must be in place to protect your capital.

Managing the risk that comes with trading forex 24/5

As we’ve touched on in this blog, there are several risks associated with attempting to trade forex 24 hours a day. The demands of monitoring a market continuously can cause considerable psychological and physical distress.

The temptation to overtrade because of practically unlimited access to the forex market is high. Varying levels of volatility and liquidity between the trading sessions may result in sudden and unpredictable price movements, leading to unanticipated losses. Market moving events may occur at any time, causing sudden fluctuations in volatility, resulting in poor financial outcomes if you weren’t properly prepared to react in time.

Mitigating all these factors requires various strategies.  For one, consider setting trading hours for yourself that best suit your schedule to avoid overtrading. Implement stop-loss and take-profit orders to limit losses and lock in profits. Stay informed about economic news, releases, and events that may impact open positions. And take consistent breaks, keep level-headed, and be mindful of your feelings so as to avoid emotive trading decisions.

Trading with IronFX

Register with IronFX and gain access to a top-tier, flexible trading experience, more than 500 tradable instruments, multiple account types, and fast trade execution. Through this broker, 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.

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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.