- PPF Points
- 2,039
Forex markets are closed during the weekend. The reason is that the global banking system, which is responsible for the whole currency exchange process, is on vacation at that time. In contrast to stock markets, which are linked to the specific stock exchange where they are traded, the forex market is not associated with any one place and it is run by a network of international banks, financial institutions, and governments, whereby the majority of them do not work on Saturdays and Sundays. As no major players are involved, liquidity which is essential to the efficient functioning and equity of the market is actually missing, and the rest of the participants are not the end users. If the market doesn't have many participants, it would suffer from fluctuations in prices, large spreads, and an increased risk profile of traders. As a result, the market's closure has not only been a way to protect both retail and institutional traders from unnecessary volatility but also to maintain the ecosystem of the market. Without these significant establishments, the market is basically dormant. However, some brokers provide the possibility of weekend trading by using cryptocurrencies or a few synthetic assets, but indeed, the real forex market—sometimes referred to as the currency market with EUR/USD or GBP/JPY—only operates during the official trading week from Monday to Friday. The forex market is not a 24/7 market because it still functions with human-operated systems, uses centralized clearing, and relies on regulated financial structures, which all have time-offs. Consequently, the market's weekend closure should be seen as an indispensable measure to keep the market functioning in an orderly and stable way and for a new cycle which starts on Sunday evening when the Sydney open takes place.
