FX · How the FX market works · lesson 7 of 9 · 6 min read · David Alexander
A day in the FX market
The FX trading day
FX trades continuously from the Wellington open on Monday morning to the New York close on Friday evening, but the market is not the same market all day. Liquidity follows the sun - deepest where London and New York overlap, thinnest between the New York close and Tokyo's build - and when the book thins or the market closes, prices can gap: reopen or jump to a level with nothing traded between.
The same EUR 40m order that marked the price 2 pips at London mid-morning would carve through five times the levels at 22:00 UK time. Nothing about the order changed. The market it landed in did - and it changes on a timetable you can read in advance.
What does the trading day actually look like?
Dealing follows working hours around the planet: Wellington and Sydney open the week, Tokyo builds Asian liquidity, London takes over as Europe's banks arrive, and New York overlaps London through the afternoon before closing the day. The market never rings a bell between them - one region's dealers hand over to the next. Depth peaks where the two biggest centres overlap, roughly 13:00 to 17:00 UK time, and hollows out after New York closes, when the same order meets a fraction of the standing quotes.
Twice a week the rhythm breaks completely. From Friday's New York close to Monday's Wellington open, there is no book at all - and news does not keep market hours. Whatever happened over the weekend is priced into Monday's first quotes, which can sit far from Friday's last. That is a gap: the price did not travel between the two levels, because there was nothing to travel through. Thin books produce the same effect in miniature - around news seconds, and in the dead hours after New York.
Worked example
figures in USDYou hold 0.5 lots of EUR/USD into the weekend, stop 30 pips away. A pip on a full lot is worth $10.
- You hold 0.5 lots of EUR/USD into the weekend with a stop 30 pips away. Each pip is worth $5 on your size ($10 per full lot), so the stop plans a loss of $150.
- Weekend news lands and Monday opens 20 pips beyond your stop. A stop cannot execute inside a gap - there are no prices there - so it fills at the open: 50 pips, $250, which is $100 beyond the plan.
- The arithmetic is symmetric: an open the same distance beyond a take-profit pays $100 more than planned. Gaps ignore intent - they reprice whatever was left exposed, in whichever direction the news ran.
What this means for you
The clock is a public input, so use it like one. Expect the cheapest, deepest trading where London and New York overlap, and expect worse fills and wider spreads outside it - the same trade costs more at 22:00 than at 15:00. A stop is a plan for a market with prices in it: through weekends and news seconds, it caps nothing, so holding through them is a decision about gaps, not just direction. The market hours tool below shows which sessions are open and where they overlap, right now, in your own timezone.
Try it yourself
Market hours and session clock
Which sessions are open now and when they overlap, in your timezone, DST handled.
Check your understanding
Question 1 of 4
Why does the same order move the price further at 22:00 UK time than at 15:00?