To succeed in forex trading, it is imperative to come up with a good plan. To plan well, you need to know how many forex trading days in a year are available to you. Ever heard of a trading calendar? It is a weekly, monthly, quarterly, or even yearly trading plan.
Every successful trader has a forex trading calendar, some trade at specific times of the day, while others are only active during certain days of the week.
In this article, we will discuss the number of forex trading days in a calendar year and the role bank holidays and weekends play when planning your trading days.
Number Of Forex Trading Days In A Year
How many trading days in a year? – The exact number of forex trading days in a year ranges between 252 and 253 depending on whether or not it is a leap year. Here is how we arrived at this number.
Practically, there are 365 days in a non-leap year and 366 days in a leap year. Although forex trading still takes place during weekends (Sundays), sessions are usually limited to a few hours, which is why we don’t count that as a full trading day. This is mainly because the Sunday session is a Monday session in the eastern part of the world (Sydney and Tokyo).
While certain days are designated as “weekly holidays,” others are designated as fixed holidays, and the market will be shut on those pre-decided days. Generally, we have 261 weekdays, that is 365-104 weekends (52 weeks multiplied by 2) in a non-leap year. Taking out holidays like Christmas Day, New Year’s Day and US holidays is how we arrive at 252 days for a non-leap year. That is 261 subtract the 9 US bank holidays.
In a perfect week, with no holiday breaks, trading begins at 5 PM EST every Sunday and pauses at 4 PM EST on Friday. In between, the world’s FX markets are open 24 hours a day.
On Sunday, trading is limited to a few markets and a few hours in the evening because of different time zones. This is also the reason why markets remain open 24 hours a day during weekdays.
Understanding the 24-Hour Cycle Forex Trading Day
A full forex trading session lasts about nine hours. The market is structured into four such sessions with some overlapping to cap a 24-hour forex trading day. Sydney kicks off the first trading session of the day, followed by Tokyo, then London and New York, after which the cycle repeats.
- Sydney 5:00 pm to 2:00 am EST (10:00 pm to 7:00 am UTC)
- Tokyo 7:00 pm to 4:00 am EST (12:00 am to 9:00 am UTC)
- London 3:00 am to 12:00 noon EST (8:00 am to 5:00 pm UTC)
- New York 8:00 am to 5:00 pm EST (1:00 pm to 10:00 pm UTC)
Dealing With Daylight Saving Time
Daylight saving affects four calendar months during a year. The opening and closing times vary in the October/November months— the fall and March/April months— the spring. The United States, the United Kingdom, and Australia are some of the markets affected by Daylight Saving Time (DST).
This shift is often very tricky because it is not standard for all the countries affected. For instance, the time difference between the Sydney sessions and the New York session increases by two hours to 16 hours when New York switches to Standard time in the fall.
The reason behind this is that New York moves backward by an hour while Sydney moves forward by an hour.
In the March/April period, New York gains an hour while Sydney loses an hour, thus cutting the time difference back to 14 hours.
Who Determines When a Forex Trading Session Begins and Closes?
There is a reason why the sessions are named Sydney, Tokyo, London, and New York. All those four cities are the homes of the countries’ main stock exchanges. For instance, the Australian Stock Exchange is located in Sydney, Japan’s Nikkei is in Tokyo, and then you have the London Stock Exchange in the British Capital, and the NYSE in New York City.
The reason why forex trading sessions are named after the headquarters of the respective countries’ stock exchanges is that capital markets open at the same time, with the stock exchange being the conventional signal that kicks things off by the ringing of a bell.
Subsequently, the markets close with the ringing of a bell, signaling the end of a forex trading session.
The Impact of Bank Holidays on Forex Markets
In business, national and global holidays are referred to as bank holidays. The reason behind this tag name is that when banks are closed, business activity is slower, and so is the foreign exchange market— turnover is lower.
The market is especially affected by bank holidays in the US, Japan, the EU, the UK, and Switzerland. This is because these countries’ currencies form the major forex pairs (GBP/USD, USD/JPY, EUR/USD, USD/CHF). These are the most popular forex pairs, making them also the most liquid.
With markets closed in these countries, trading the pairs can become very speculative, which is why some traders are likely to remain inactive during bank holidays.
Note that, if a holiday is on a weekend, trading is closed the Friday before or the Monday after. It is advisable to pay close attention to US holidays because of the influence the world’s largest economy has on forex trading. The US has nine bank holidays in a year.
Should You Trade During Bank Holidays?
Most bank holidays do not affect the entire world. Apart from the New Year, which is a global holiday, even when the US markets are closed, other parts of the world continue to trade. So, should you trade during such periods?
The short answer is again, follow your plan. If your trading strategy allows you to take advantage of opportunities that emerge when some markets are closed for bank holidays, then there is no reason to keep off the market.
However, it is advisable to stay away from the affected currency because it may face liquidity issues during the session.
Should You Trade Every Day Of The Week?
When we talk of day trading, it sounds like you have to trade every day to call yourself a day trader. That is not accurate, and in fact, it is not recommended if you want to be a successful day trader.
There are over 250 forex trading days in a year, so if you plan to trade every day, you are most likely going to suffer from fatigue, which could lead to poor decision-making. Moreover, a perfectly planned forex trading strategy requires regular evaluation due to the dynamic nature of the market.
Can a weekend be enough to check whether your strategy would still work if an unexpected event that affects the forex market takes place in midweek? Probably not.
As a rule of thumb, you only trade when the market aligns with your plan. It is the reason why experts recommend coming up with a forex trading plan before jumping in with both feet.
However, you can still maximize your trading days by using forex signal services to find favorable opportunities. Forex signals service providers like the one offered through Telegram. Forex app can be used to augment earnings from your regular trading plan.
What Days of the Year Should You Not Trade Forex?
In this segment, we will address trading days that are affected by major market events that could lead to unpredictable forex price movements.
There are regular days during a month when some currencies move unpredictably. Geopolitics, war, and pandemics aside, forex traders should pay attention to regular actions taken by central banks like interest rate cuts and hikes.
Others include quantitative easing and economic stimuli, as well as, gross domestic product updates, changes in inflation rates, consumption, oil and gas inventories/supply, jobs data, unemployment rate, and manufacturing output, among others.
Whenever the government or central bank of a particular country issues updates on the above economic measures and several others not listed, the currency of that country is likely to experience high levels of volatility shortly before and after the update.
Although some traders choose to wait for a few hours before resuming trading, others choose to stay off the market for the day entirely. A major update can send a given currency spiraling downwards or trending upwards against counter currencies.
Therefore, it may be wise to stay off the market during such trading days to avoid being caught in a price slippage.
Best Days of the Week for Forex Trading
Traditionally, the London session is the busiest of all four sessions. The reason is that it links the eastern sessions— Sydney and Tokyo with the Western session— New York. It is also why London is often referred to as the financial hub of the world because of the number of markets that operate within that time frame.
This also makes it the best session to trade. Highly liquid pairs tend to have tighter spreads thus reducing the cost you incur when you open and close a new trade.
As such, the busier the market, the higher the liquidity and the better it is for forex trading. The same principle applies to the days of the week. Statistically, some days are busier than others, which essentially makes them ideal for forex trading.
The weekly trading activity is closely related to how global markets work. Because markets are closed during weekends, businesses tend to limit the number of transactions they do on Friday, thus affecting overall foreign exchange turnover.
The same applies to Monday. Coming off the weekend, Mondays are often slow business days with financial institutions opting to observe how the market shapes up in the new week before making major transactions.
Therefore, the best trading days of the week are Tuesday, Wednesday, and Thursday. Currency pairs like EUR/USD, GBP/USD, and USD/JPY statistically have the tightest spreads during these days.
This article provides a good summary of the importance of planning your trading calendar. We have established that to come up with a good plan, it is paramount to understand forex trading days. This is not just about knowing which days of the week the forex market remains open for 24 hours.
It is more about understanding factors that affect different trading days, the busiest and best trading days, as well as, what precautions traders can take if they plan to trade during times when the forex market can be highly unpredictable. On the latter, this represents high levels of risk, and thus volatility.
But then again, we say, in forex trading, volatility is a trader’s best friend. Why? Because traders stand to profit from both sides of a trade multiple times a day. But not if you are inexperienced, a novice, or a trader who cannot keep your emotions in check. If you fall in this category, fear not— because the industry has a solution for you.
Using a reliable forex signal can help you maximize profits during times of volatility. However, not all signal service providers are reliable. Service providers like the ones offered by Telegram. Forex app can be the difference between success and failure as you look to pounce on volatility.