Markets in Focus: Forex

Investing Strategy
April 10, 2024
Every week we provide insights into popular assets and hot questions, so you can easily learn more about the investment market in bite-sized pieces.

In this Markets in Focus we take a closer look at foreign exchange (Forex or FX or currency) markets.

Change customers like to trade Forex. This is not surprising because the Forex market offers non-stop opportunities 24 hours a day to benefit from.

Why is the Forex market continuously available

This is because there is no central exchange for Forex where all transactions take place. Trading largely takes place between the major banks in the world. Because they are on different continents, they are also active in different time zones.

On Sunday evening at 11:00 PM, when the weekend is slowly coming to an end in most of Europe, trading starts in Australia. It is Monday morning there. After two hours, Tokyo also wakes up, causing the volume of Forex trading to increase. There is mainly heavy trading in the Japanese YEN and the Australian and New Zealand Dollar, but because all currencies are linked, there is also lively trading in the EURUSD and USDJPY.

When the Tokyo Stock Exchange closes at 10:00 AM our time, London has been open for already an hour. This overlap ensures that we can trade Forex pairs continuously. After our lunch, New York also opens and trade gets another big boost.

When are turnovers highest on the Forex market

The largest turnovers in Forex trading take place in our afternoon. Things will calm down a bit in the evening, when European trading has dried up. Wall Street will then hold out until 11:00 PM, the moment when Australian trading begins its new day. This cycle continues until 10:00 PM on Friday evening, when the Forex traders start enjoying their weekend.

How to benefit from Forex trading

Example with Forex CFDs. If I buy 1000 euros worth of EURUSD at 1.09 with 30x leverage it means that I will be long in EUR (margin currency) and short in USD (profit currency). If USD weakens against EUR and EURUSD moves to 1.11 then closing the position will result in a 20 USD profit. As I used 30x leverage then the profit is also 30x higher meaning 600 USD. However, the opposite is also possible if EUR weakens against USD. 

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Happy trading!