Forex trading from ATM

The forex market, offers a completely different investment asset class that offers leverage and virtually unrestricted access 24 hours a day. Forex trades virtually around the clock from the Asian market open on Sunday night until the U.S. market close on Friday afternoon. The forex markets are situated all around the world. Currency trading is a global activity. Every country in the world uses money and needs to change that money into other currencies in order to trade or interact with other nations.

One of the attractions from an individual trader’s perspective is that there is this constant access to make a trade. In other words, in every transaction, a trader is long one currency and short the other. A position is expressed in terms of the first currency in the pair. For this reason, currencies are always traded in pairs; for example, if you have purchased euro and sold U.S. dollars, it would be stated as a euro/dollar pair. With a volume of over $3 trillion daily, the forex market is the largest and most liquid financial market in the world—more than three times the aggregate amount of the U.S. equity and Treasury markets combined. This means that a trader can enter or exit the market at will in almost any market condition with minimal execution risk.

Due to the sheer size of liquidity, a continuous supply-and-demand driven product (we all use and need money), and the accessibility of trading make many professional traders consider the forex market like a bank’s automatic teller machine (ATM). The forex market is so vast and has so many participants that no single entity, not even a central bank, can control the market price for an extended period of time. Unlike other financial markets, the forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations, and individuals, trading one currency for another. The lack of a physical exchange enables the forex market to operate on a 24-hour basis, spanning from one zone to another across the major financial centers.

Currency exchange happens at every level of society. As an individual, you may have changed money when traveling on business or on vacaation. Or maybe you have sold something on eBay to somebody in another country. Their payment comes in to your account in their own currency, and the bank or other payment processor such as PayPal changes it for you. That is currency exchange at the root level.

Foreign exchange or forex trading has a different purpose, however. When you are trading on the foreign exchange markets you are not buying another currency because you need it. You are buying it in the hope that it will rise in value, so you can change it back and end up with more money than you started out with. Of course, it is risky. The price movement could go against you and then you would end up with less money instead of more. So you will want to gather plenty of information about currency trading before you start.

Forex trading began in the 1970s when the major currencies were deregulated so that their values were no longer fixed. The banks and large investors quickly saw the potential for making money from the changing prices. The main forex marketplaces are the big financial centers of the world. London sees the highest activity with New York second and Tokyo third. Other major players are Sydney, Zurich and Frankfurt. Originally you had to be in one of those places to trade money, or at least have a telephone connection with a broker who was there. It was very difficult for somebody who was not on the spot to act fast enough to react to the sudden fluctuations in price that can happen in the forex markets.

But modern advances in technology have changed all of that. Since the rise of the internet it has been possible to trade on your own account from anywhere. This means that it has become easier and easier for the little guy to get a piece of the action. The forex market hours stretch from Monday morning in Sydney, Australia to Friday afternoon in New York. During that time the market is open somewhere around the globe at all hours of the day or night. However it is not a 24/7 market because it does shut down on weekends. 24/5 would be more accurate.

If you need to know the exact times that the markets open and close, you have to take time zones into consideration. It is very simple when expressed in UTC. This is Universal Coordinated Time, formerly known as Greenwich Mean Time. This is the standard (winter) time in Greenwich, London which is the point of zero longitude on the globe.

So, the normal forex market hours are 22.00 Sunday UTC to 22.00 Friday UTC. This is 10 pm in the UK in winter time. New York is 5 hours behind the UK so the global forex market opens and closes at 5 pm Sunday/Friday in New York, 2 pm on the US west coast, 11 pm in Germany, 8 am Monday/Saturday in Sydney. Things get a little complicated when you start to try to take summer time daylight saving into account. This makes one hour difference in countries that observe it. But daylight saving operates in a different way in the southern hemisphere countries such as Australia which have summer time from September to March instead of March to September. The hours of the different major national markets are as follows:

Sydney: 10 pm to 7 am UTC
Tokyo: 12 midnight to 9 am UTC
London: 8 am to 5 pm UTC
New York: 1 pm to 10 pm UTC
Or we can express that in EST (Eastern US time):
Sydney: 5 pm to 2 am EST
Tokyo: 7 pm to 4 am EST
London: 3 am to 12 noon EST
New York: 8 am to 5 pm EST

You can see that these correspond to 24 hour cover. However, this does not necessarily mean that trading will be good at all of these times. Just after a major market opens, the prices can be very volatile and unpredictable. Many traders will stay out of the forex market for up to an hour four times a day when the financial markets are waking up in these major cities.

The US dollar is the most traded currency by a long way, involved in 2.5 times as many trades as its nearest rival the euro. This means that events in the USA have a greater impact on the financial markets than events in other countries. The New York market tends to slow down around 3 pm local time (8 pm UTC) and if you are involved in a US dollar pair, this can be a good time to stop trading for the day.

So theoretically you can trade 24 hours a day from Sunday night to Friday night. Automated software in the form of a forex robot can even make this physically possible. However, a cautious trader will choose his times and will not be active during all of the forex market hours. While some people never think about foreign currency from one overseas trip to the next, others are studying charts and financial information to make money from the rising and falling prices with the aim of becoming financially free by trading on the foreign exchange markets.