Although in theory, the currency market is never closed, it is difficult to see anyone trading on Sunday. Novices may even think that the cessation of trading activity is because the foreign exchange brokers are closed on weekends. But as described below, this is not the case.

Retail traders cannot trade on weekends

Major participants in the foreign exchange market

Currency transactions are mainly to promote trade and tourism. Moreover, the transactions of institutional investors accounted for 93% of the total transaction volume. This means that in the foreign exchange market worth 5 trillion US dollars of transactions, the transaction volume congratulated by retail traders is only about 350 billion US dollars. This is one of the main reasons why currency markets are closed on weekends.

Why do foreign exchange brokers not support weekend trading

Except for the Middle East, almost all financial institutions in the world are closed on weekends. At the very least, the transaction department of most banks will not operate.

This shows that there will be a lack of liquidity worth 4.7 trillion US dollars over the weekend. Therefore, if the retail broker’s platform still supports weekend trading, you may face two problems. First of all, brokers as market makers will not be able to hedge risks because the main counterparties (banks and other financial institutions) are not on the trading platform.

Why do foreign exchange brokers not support weekend trading

Second, due to lack of liquidity, brokers cannot afford narrow spreads. Currency spreads are inversely proportional to liquidity (when the main participants compete to execute transactions, the spreads will be reduced).

Therefore, in order to compensate for the loss of liquidity, reduce risk, and execute transactions as a counterparty, foreign exchange traders should significantly increase their spreads (when OANDA offers weekend trading, the spread often reaches 20 points, but then it cancelled this feature). Increased spreads will result in fewer retail traders entering the market. In addition, foreign exchange brokers need to arrange staff to monitor market trends during the weekend.

In order to maintain the operation of the system on weekends, brokers need to pay costs related to other facilities (such as electricity bills and uplink equipment, etc.). Finally, brokers may not be able to make more profits through weekend trading. If there is a large gap in the market the next day, this may cause substantial losses for the broker. Since the associated returns are not worth the risk, retail brokers would rather not offer weekend trading.

Is there any way to trade on weekends?

In theory, high-net-worth individuals with large accounts can negotiate with foreign exchange brokers to support them in trading on weekends. However, considering both liquidity and spreads, this trading method is not rigorous.

Is there any way to trade on weekends?

The weekend market is closed to allow forex brokers to maintain the system during the weekend (for example, after midnight on Saturday GMT time, InstaForex traders may find that the platform is out of contact for about two hours). If professional traders have the ability to accurately assess currency trends, they do not need to execute orders on weekends. They would rather trade on Monday (GMT) when the market opens. For novice traders, it is best for them to take a break, evaluate their performance, optimize their strategy, and then greet the market opening on Monday with full spirit.

Under normal circumstances, in the perception of investors, the trading hours of the foreign exchange market are from 4 am on Monday to 4 am on Saturday, Beijing time. But this is not the case. The global foreign exchange market also fluctuates on Saturday and Sunday. This is mainly because Arab countries only rest on Fridays and work on Saturdays and Sundays. The foreign exchange markets of these countries are still fluctuating.

Under normal circumstances, on Saturdays and Sundays, foreign exchange transactions in the market will be directly transferred to the foreign exchange trading center in Dubai. Although the transaction volume is very small, it will also have a certain impact on foreign exchange prices.

There may be some small fluctuations in foreign exchange on weekends, but because the overall foreign exchange trading volume of Arab countries is relatively small, it can hardly affect the exchange rate of the entire foreign exchange market, so investors do not have to worry about being affected.