The simplest answer is that the forex is open for trading all the time, but that the specific hours it opens and closes at any given location depending upon where you are in the world. The base reference time for all opening and closing times worldwide is Greenwich Mean Time, commonly abbreviated GMT. Many websites devoted to clarifying forex business hours describe the opening and closing times with three or four significant examples, usually
- New York, where the forex opens at 1 pm GMT and closes eight hours later, at 10 pm GMT
- Sydney, where the forex opens at 10 pm GMT and closes eight hours later, at 6 am GMT
- Tokyo, where the forex opens at 12:00 am GMT (midnight, in other words) and closes eight hours later at 9 am GMT
- London, where the forex opens at 8 am GMT and closes eight hours later at 5 pm GMT
Here's Where Things Begin to Get Complicated
One source of confusion for new forex traders has to do with how the various websites choose to present the open and closing time data.
In all cases, to make a meaningful description of trading hours worldwide, the opening and closing times at each location worldwide need to be presented with a common base reference time. In this article, for instance, the data is referenced to GMT. In other articles with a United States orientation, however, the common base reference time often used is Eastern Standard Time. It isn't wrong, but it's a little confusing for readers who don't distinguish between GMT and EST --something few persons other than forex traders and airline personnel need to deal with on a regular basis.
Another possible source of confusion is that GMT is always just that, summer, winter and fall. Eastern time, however, comes in two flavors: Eastern Standard Time (EST) and Eastern Daylight Time. Since the agreed-upon reference time worldwide is actually GMT, which has no Greenwich Mean Daylight Savings Time, this means that a New York trader who chooses to reference Eastern time rather than GMT, must keep in mind that during Daylight Savings Time in New York, the trading hours shift by an hour because the GMT reference time, needless to say, does not shift.
Eight Hours a Day or 24?
The first section of this article notes that at each location the forex is open for eight hours. It is true. But other websites on the subject of forex trading hours note that the forex is open "24 hours a day." It is also true -- or at least "true-ish."
The explanation isn't complicated, but at first, it may seem a little strange and requires a two-part explanation. First, remember that if it's midnight in New York when the New York forex market is closed, it's also the middle of the trading day somewhere -- in Tokyo, for instance. Also, keep in mind that forex is a worldwide market that is entirely virtual. There's no trading pit anywhere. When you enter a midnight forex trade on your laptop in New York, the trade is executed in Tokyo or in another of the several trading centers worldwide that are open when you initiate the trade.
So, yes, at any given trading center, it's an eight hour day. But that really doesn't matter, because somewhere in the world trading centers are open. You can trade anytime you want, although you should also note that you'll get the narrowest spreads -- the broker's profit margin -- when the maximum number of trading centers are open or, more precisely, when the trading volume for your currency trade is greatest.
Five Days or Seven?
Still another source of confusion has to do with how many days a week the forex is open. Some websites may declare without further explanation that the forex is always "open 24 hours a day" and others, probably the majority, note that the forex market is open "five days a week."
Again, both statements are true enough if you put them in context. The apparent contradiction comes because just as a given trading center is open for eight hours and yet you can trade 24 hours a day, so it is also true that although any given trading center keeps a five day week, somewhere in the world, another trading center is open when that trading center is closed. It is the happy consequence of the way the day of the week shifts forward or back as you cross the international dateline.
In short, you can forex trade anytime you want. That's the basic information you need. Also, as noted, you'll get the best trading spreads when the volume is peaking -- that is when the greatest number of major trading markets are open.