Understanding 24/5 trading and the markets which are open for extended periods can help you to make better- informed decisions and potentially improve your trading performance. This guide will explore the concept of 24/5 trading, its benefits, risks, and strategies for success.
In the fast-paced world of trading, the ability to access markets at any time is a significant advantage. 24/5 trading allows traders to engage with global markets around the clock during weekdays. Whether you’re a novice or an experienced trader, this is what you need to know.
What Is 24/5 Trading?
24/5 trading refers to the ability to trade financial instruments 24 hours a day, five days a week. Unlike traditional stock exchanges, which have set opening and closing times, 24/5 trading allows for continuous market access from Monday to Friday.
Traders in 24/5 markets can react to market events as they happen, regardless of their location. Being able to trade in and out of positions rather than waiting for an exchange to open — helps with spotting new trading opportunities or managing risk.
What Markets Offer 24/5 Trading?
Several markets offer 24/5 trading opportunities, with forex and crypto markets being the most prominent.
24/5 Forex Markets
The forex market where international currencies are bought and sold — operates continuously across various global financial centres. The trading week starts at 22:00 GMT on Sunday when the Sydney session, also known as the Asia-Pacific session, starts. The forex markets close at 22:00 GMT on Friday when US currency exchanges cease trading for the week.
Trading volumes can be expected to be higher in currency pairs which are local to the market, for example, AUDUSD in the Sydney session, but it is possible to trade all currency pairs when an exchange is open.
24/5 Crypto Markets
Cryptocurrencies, such as Bitcoin and Ethereum offer 24/7 trading. These digital assets are traded on various platforms and exchanges that operate around the clock. The decentralised nature of cryptocurrencies means that they are not bound by traditional market hours, providing traders with more flexibility.
Other 24/5 markets
Some commodities and indices may also be traded on a 24/5 basis, depending on your broker and market conditions. These instruments are traded as CFDs, so are synthetic in nature and have been created so that investors can buy and sell positions when the official exchange such as the Chicago Board of Trade (CBOT) is closed.
Tip: Some crypto markets may be offline for periods of time, for example, during public holidays.
Benefits of 24/5 Trading
One of the primary benefits of 24/5 trading is the flexibility it offers. Traders can choose when to trade, fitting their activities around other commitments. This is particularly advantageous for those with busy schedules or those who wish to trade outside of standard business hours.
Another benefit is the potential to capitalise on market movements across different time zones. As global events unfold, market sentiment shifts, creating opportunities for profit. Traders who are able to monitor these developments can position themselves to take advantage of sudden price changes.
Finally, 24/5 trading increases opportunities for profit. With more time to trade, there are more chances to enter and exit positions, potentially leading to greater returns. However, it is important to approach these opportunities with a well-thought-out strategy to manage risks effectively.
Risks of 24/5 Trading
While 24/5 trading offers many benefits, it also comes with its own set of risks. One of the main challenges is managing trades across multiple time zones. This can be demanding and may lead to fatigue and a greater risk of your decision-making being influenced by psychological biases.
Without proper discipline, traders might make impulsive trades based on short-term market fluctuations rather than sticking to their strategy.
Increased market volatility is another risk factor. While volatility can lead to profit opportunities, it also increases risk exposure. Traders must be prepared to handle significant price swings and have robust risk management strategies in place to protect their investments.
Tip: Use stop-loss orders to automatically close out positions at predetermined price levels when you are not actively trading.
Strategies for Successful 24/5 Trading
To succeed in 24/5 trading, it is crucial to develop a well-defined trading plan and strategy. This includes setting clear goals, identifying entry and exit points, and determining acceptable levels of risk.
Effective risk management techniques are also essential. This might include hedging positions or automating trades with advanced tools.
Utilising technology and tools for trade automation and monitoring can greatly enhance trading efficiency. Automated trading systems can execute trades based on predefined criteria, reducing the need for constant monitoring and helping to maintain discipline.
Maintaining a healthy work-life balance is equally important to avoid burnout. Traders should set limits and take regular breaks to ensure they remain focused and able to make rational decisions.
Is 24/5 Trading Right for You?
Deciding whether 24/5 trading is suitable depends on several factors, including your trading goals, lifestyle, and risk tolerance. Consider whether you can commit the time and resources needed to monitor markets effectively and whether you have the discipline to stick to your trading plan.
If 24/5 trading does not align with your needs, there are alternative approaches to consider, such as trading during specific market hours or focusing on less volatile instruments.
Tip: Keep a trading journal and analyse your performance to establish if trading 24/5 is right for you.
Final thoughts
24/5 trading offers an opportunity to engage with global markets and potentially improve trading performance. However, it requires careful planning, effective risk management, and a disciplined approach.
If after considering the pros and cons, you are still looking to trade on a 24/5 basis, then you also need to consider which broker you choose to use. Although the markets in question might be open, whether or not you will be able to trade them will ultimately depend on whether your brokerage platform provides access to them.
Learn more about 24/5 trading by joining the eToro Academy.
FAQs
- What is the difference between 24/5 and 24/7 trading?
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24/5 trading refers to market access from Monday to Friday, while 24/7 trading includes weekends. 24/7 trading typically relates to cryptocurrency markets.
- How can I manage the risks of 24/5 trading?
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Implementing a robust risk management strategy, including stop-loss orders and diversification, can help to manage risks effectively. Trading in small size is always recommended and it can be particularly useful when trading 24/5 to avoid taking on positions so large that price moves distort your decision-making.
- What tools are available for 24/5 trading?
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Many platforms offer tools for trade automation, market analysis, and real-time monitoring to support 24/5 trading activities. Another useful tool when you are trying a new strategy of approach is to start off using a demo account where any losses or gains would be made using virtual funds.
This information is for educational purposes only and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to, buy or sell any financial instruments.
This material has been prepared without regard to any particular investment objectives or financial situation and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Not all of the financial instruments and services referred to are offered by eToro and any references to past performance of a financial instrument, index, or a packaged investment product are not, and should not be taken as, a reliable indicator of future results.
eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this guide. Make sure you understand the risks involved in trading before committing any capital. Never risk more than you are prepared to lose.