Of all the trading opportunities available to us, the forex market offers a unique advantage: it is open 24 hours a day.
The benefits of this are numerous, and extend beyond simply opening and closing positions in the middle of the night because you can’t get to sleep!
Here’s a look at some of the key benefits of trading forex at any time of the day and night.
Reacting to breaking news
Just because everyone in a specific time zone has gone to bed, this doesn’t mean that the world has stopped turning in that particular country or indeed anywhere else.
Every minute of every day holds the possibility of a significant event occurring – be it political, economic or otherwise.
Now, we’re not advocating that you don’t sleep in case something monumental happens that shifts the forex market, but you do at least have the advantage of opening and closing trades beyond the typical trading hours.
There are plenty of resources online for keeping up to date with the latest daily forex news, so there’s no excuse for not staying ahead of the game.
Liquidity around the clock
The great thing about the 24/5 forex market is that traders all over the world are feeding liquidity into the system, ensuring that you can open and close positions at the price points you’re looking for.
With no central exchange, traders are free to transact with one another ‘over the counter’ – ensuring plenty of easy-to-access liquidity.
From Australia and Asia to the sessions in London and New York, there is a steady stream of liquidity flowing into the forex market, and this – typically – helps to keep spreads low, especially when trading the major currency pairs.
Volatility – it’s good for some
Let’s think about some of the events that can lead to volatility in forex prices:
- Economic stability, be it ‘local’ or global
- Political changes, e.g. new presidents or governments
- New or broken trade agreements
- Natural disasters or viral pandemics
These don’t sleep when you do, and such changeable and unforeseen situations lead to volatility in the market – for the savvy trader, this is good news indeed.
A truly global market
Linked to the notion of volatility is the freedom that forex traders have given how many major, minor and exotic currency pairs are available.
If a situation begins to unfold in deepest, darkest Peru or in a prominent Western nation – such as the value of the dollar decreasing as Joe Biden takes the lead on Donald Trump in the polls – then we have the chance to take advantage by trading a relevant forex pair any time of the day or night.
A question of strategy
As anyone who has studied the forex market in any depth will know, there are times of the day when certain trading strategies are more effective than others.
This typically relates to the timings within a specific session, with a breakout early in the day followed by something of a sell-off later in the cycle.
With trading sessions across the world taking place at different times, we can implement these strategies at various points throughout the day – (hopefully) maximizing our profit potential!