Forex Market Weekly Open And Close
This is very much a beginner topic, but I think it is essential to learn about the market open and close because trading mistakes made during these times can be avoided, as long as you are aware of them.
To start, I want to point out that the Forex market is not the same as the stock market in terms of when the market closes and opens.
The STOCK market closes and opens every day with specified trading hours during the day, making it easier to be in sync with the markets and be present when opportunities arise.
FOREX, on the other hand, is a 24/5 market! Meaning from Sunday (in most places) until Friday, the market is moving and booming making it harder to sync your schedule around it.
No one should be trying to stay awake 24/5 and that inevitably means you will miss some opportunities. It will happen! But it shouldn’t scare you. A 24/5 market means there are MORE opportunities out there. The next trade is always around the corner.
It is a warm (or cold) Sunday night and the stage is set. All of your key levels are plotted. Your bias for the week and the next day (which can change at any moment by the way) is complete.
You have an open position floating in profit, and the clock strikes! BOOM, your open position is gone, and when you check your account history, the trade has closed for a loss greater than your stop loss!
The next step is to pick up the phone and call your broker because there must be a mistake! TRUST ME, an error is unlikely. Price has probably just gapped below/above your stop loss.
This is what your broker means in the disclaimer by “Your losses can exceed invested capital” or something along those lines. That, my friend, is only possible because of a little thing called volatility!
Volatility is more commonly seen in the stock markets where the markets close every day. Gaps are more frequent because of the pause in trading.
Let me be clear… Just because the MARKET is closed, that does not mean PRICE has stopped moving. You are just not allowed to trade it. This is why gaps occur (up or down) when the market opens.
Therefore your trade can be closed at a price worse than your stop loss because the market was still moving in the background, but retail traders can’t do anything about it.
I have to be honest and say one of the reasons I enjoy trading Forex over other markets is because the markets are ALWAYS open in the week, and only close for the weekend.
That way, if I have to hold a trade for a couple of days, I don’t have to worry about gaps every single day. I can decide to avoid holding over the weekend or decrease my size just before the weekend.
What the market close does to volatility (most times) is kind of what happens to a stadium after the game is over. Or even before the game is over if your team is losing.
People pack up their desks, take off risk they can’t afford, and are careful not to put on more risk. Everyone is calling it a day and the market dries up. The market may start to consolidate and not go anywhere because no one is putting risk on at the end of the game.
In Stocks, that happens every day. Trading Forex is a bit different. We operate within SESSIONS (which deserves an article of its own).
To explain Trading Sessions simply, think of a relay race. When one region closes up shop, they hand it over the next. There are 3 main sessions people trade – The ASIAN session, the LONDON session, and the NEW YORK session. That’s usually where volume picks up and trends begin or end.
So once ASIAN markets CLOSE, LONDON markets OPEN and as LONDON markets CLOSE, NEW YORK markets OPEN. And so the cycle continues. That is how the Forex market can remain open 24 hours a day, 5 days a week. Someone is always willing to trade with you.
Although market close is usually dry in volatility and trends usually pause around this time, markets are still tradeable. Smaller timeframes can present last-minute opportunities to those who are looking. BUT! You can decide to call it a wrap after a long, hopefully profitable, week and no one will judge you for it.
Don’t bet the farm.
Don’t lose your shirt.
Cut the L.
Keep the W.