When Does the Forex Market Close on Friday?
Understand the precise timing and operational reasons behind the Forex market's weekly conclusion, and its implications for traders.
The foreign exchange (forex) market is a global, decentralized marketplace for currency trading. Unlike stock markets, which operate within fixed daily hours, the forex market maintains a 24-hour operational cycle for most of the week. This continuous activity is possible due to the overlapping business hours across major financial centers worldwide. However, this round-the-clock trading does come to a halt each week, pausing for a specific period over the weekend.
Global Closing Time on Friday
The forex market typically closes on Friday at 5:00 PM Eastern Standard Time (EST) or Eastern Daylight Time (EDT), depending on the time of year. This time marks the end of the New York trading session, which is generally considered the closing point for the global forex market for the week. While it is a global market, the closure is not a single, simultaneous shutdown across all time zones. Instead, it signifies the winding down of the last major financial center for the week.
For traders in other regions, this 5:00 PM EST/EDT close translates to different local times. For instance, it would be 10:00 PM in London (GMT) on Friday, and for Asian markets, it would already be Saturday morning, specifically 6:00 AM in Tokyo (JST) or 8:00 AM in Sydney (AEDT), as those markets have already concluded their trading week. The market’s “close” is the cessation of trading in the New York session, ending the 24/5 trading cycle until the next week.
Reasons for the Weekend Closure
The forex market closes on weekends due to the shutdown of major financial institutions and liquidity providers. Banks, investment firms, and other large institutional participants, which are the backbone of forex liquidity, observe standard weekend holidays. Their closure significantly reduces transaction volume and counterparty availability, drastically reducing market liquidity.
Without sufficient buyers and sellers, continuous trading becomes impractical and susceptible to extreme price fluctuations. Trading during such low-liquidity periods results in extremely wide bid-ask spreads, making transactions costly and increasing the risk of price manipulation. The weekend closure maintains market integrity and protects participants from volatile and illiquid conditions.
Implications of the Weekend Close
No standard trading activity occurs during the weekend closure. For traders, a key implication is “weekend gaps.” These gaps occur when Sunday evening prices open significantly higher or lower than Friday’s close, reflecting news or events over the weekend. Events include economic data, geopolitical developments, or unexpected announcements.
Holding open positions over the weekend exposes traders to gap risk. A profitable Friday position could open with a substantial Sunday loss if adverse news causes a significant shift. Traders must consider this exposure, deciding whether to close positions before the weekend or manage risk through stop-loss orders, recognizing stops can be “gapped” over. Understanding these dynamics is crucial for effective risk management.
Weekend Reopening
The forex market reopens Sunday evening, beginning a new trading week. This typically occurs at 5:00 PM EST/EDT. The reopening coincides with the start of Asia-Pacific trading sessions, specifically Sydney and Tokyo markets. This staggered opening across global financial centers allows the 24-hour trading cycle to resume. From Sunday evening until Friday evening, the market remains continuously accessible for trading.