Forex Market Hours / Overlap

Beginner Questions
1

I understand that there are various trading sessions during the week for various regions (i.e. 0000-0900 GMT Tokyo) and there are hours when two regions overlap (i.e. Tokyo and London 0800-0900 GMT). I also understand that at those overlapping trading hours, we are expected to find the highest volume of trades.

Then why is it that whenever I go on my demo account and specifically look at GBPJPY market during those overlapping hours, I do not see much difference in volumes of trades than that of any other time. Am I looking at the price or reading the time incorrectly?

Also, Is it possible for prices to fluctuate when the markets are closed?

I would appreciate anyone who can address these questions. Thank you.

2

Hello John, welcome to the forum.

Here is my tick-volume chart for the [B]GBP/JPY[/B] for the past 6 trading days.

Is this substantially different from your tick-volume chart?

Yes. [B] Only the retail forex market closes completely on the weekend[/B] — and this is only because it is not profitable for retail forex brokers to operate on weekends. Oanda tried it for a while, but abandoned the attempt.

The rest of the foreign exchange market can, and often does, transact business on the weekends, and this creates the [B]gaps[/B] in price which we often see from Friday’s (retail) close to Monday’s (retail) open.

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3

Thank you Clint. My chart does not show such substantial rise in volumes of trade as yours but I think I am seeing a similar trend. How did you divide it into weekdays? Did you manually do it or did it come with your tool?

GPBJPY.jpg700×367 26.8 KB

I guess I am wrong in that increase in volumes of trade does not also equate to huge fluctuations of price? Because when I look at the price and match with volumes, they don’t seem to move as much as the volumes show.

Thank you so much Clint!!!

4

Hi John.

I applied the day separators manually, just as you did.

The double vertical lines on my chart denote [I]early[/I] Sunday trading (2pm-5pm, New York time), prior to the 5pm opening of the Monday trading day. In this particular platform (FXCM MarketScope), the trading activity represented by those early Sunday candles gets swept into the Monday Daily candle. So, on a Daily chart, there are simply 5 candles per week representing Monday through Friday, without a Sunday candle.

You are right. High tick-volume can (and often does) occur while price is seemingly constrained in a tight range. Each tick on a tick-volume chart represents a transaction which moved the price by one pip, or more. But, it’s entirely possible for successive ticks to represent aimless (trend-less) meandering of price within a range.

In similar fashion, price can (and sometimes does) [I]begin[/I] a large, directional move on very low volume. But, for that move to be [I]sustained[/I], significant volume will have to come into the market.

If you examine the times of day when prices [I]typically[/I] make significant, directional moves, you will find that those times [I]usually[/I] fall within the periods we have identified as periods of high volume.

So, if we know when daily surges in tick-volume [I]typically[/I] occur, we have a clue to [I]potentially[/I] profitable times to look for trades.

Note the qualifiers: [I]typically, usually,[/I] and [I]potentially.[/I] Trading is a game of probabilities, not certainties.

[I]Always[/I] and [I]never[/I] are words that [I]don’t[/I] describe price behavior.

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