As a general rule, there is no limit to how long you can keep a trade open.
Some brokers might put limits, but any reputable Forex brokers won’t. As long as there is a market, theoretically, you could keep your trade open forever.
Now, just because you can, it doesn’t necessarily mean it’s a good idea.
Especially for most FX traders who are in the market to make money off of changes in value in different currencies.
You don’t “cash in” until you close a trade, so at some point, you’re going to have to do that in order to make money.
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Is There a Reason to Keep Trades Open for a Long Time?
Yes. Well, there was, but with interest rates around the world going to near zero, the motivation has virtually vanished for most retail FX traders.
With larger interest spreads, some traders would engage in carry trading as a form of making a profit from their account.
How this works is depending on the interest rates of the currencies being traded, you can be paid a “rollover” interest on your margin.
If the interest rate differential is big enough, and the currency is relatively stable, you can make a steady income from the trade. So, those carry FX traders would keep their positions open for extended periods of time, up to years.
Speaking Practically Today?
Unless you are into carry trading, there isn’t much practical reason to keep a trade open for really long periods of time.
You’re generally looking to get a profit from a move in the Forex market, and once that move has completed, you’re going to close the trade.
That can take different amounts of time depending on your trading style:
- Scalpers
Generally, scalpers are looking to get a few pips out of short moves in the markets. They trade on time frames generally below M15. Usually, they won’t hold a trade for more than an hour or two at most. - Day Traders
Typically, day traders are looking at capitalizing on a technical trend. They will generally cluster around the M30-H4 time frame charts. They’ll also usually complete their trades within a day (hence the name, day trader), often within a single “session” of up to six-ish hours. - Swing Traders
These FX traders are looking to ride a trend, more often it’s a fundamental move. Usually, they stick to H4-M1 time frame charts and can be in a trade for a few days to a few months. Rarely a trend will last over a year, so it’s not common, but swing traders to on occasion have year-long trades.
Of course, depending on your style, you likely won’t fit neatly into one of those boxes.
Some FX traders have multiple styles, for example opening the occasional swing trade while being generally focused on day trading.
Opportunity Cost
The thing is, when you open a trade, you’re putting a certain amount of your capital in the market, which means you can’t use it for other trades. As a matter of capital efficiency, you don’t want to keep your trades open for longer than strictly necessary. The longer the trade is open, the more it is exposed to risk as well.
In the end, while brokers and the market don’t put any artificial limits on how long you keep your trade open, they aren’t really necessary because the practical needs of Forex traders mean almost all trades close as quickly as possible.
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FAQs
As a general rule, there is no limit to how long you can keep a trade open.
How long can I keep a forex trade open? ›
Let's start by taking a look at how long it's possible to keep a trade open. You can hold a trade for as long as you want, as long as your broker is still in business and you are able to fulfill the margin requirements in your account. This holding time can range anywhere from a few seconds to a few years.
How long is the forex market open? ›
Forex trading hours around the world
The forex market is open 24 hours a day, from Sunday evening until Friday night. This is due to the various international time zones which allow you to trade all hours of the day. There are major trading sessions in these three locations: Tokyo (Asian session)
How long can you master forex trading? ›
Some people can pick up the skills in a matter of months, while others might need several years of steady effort. Acquiring knowledge in forex trading is a highly personalised process. The important thing is to know if you're ready to take the risk.
When should you close a forex trade? ›
Gain target. Establishing a gain target before entering a trade is essential because when the market reaches this predetermined level, the trader should consider closing the position to lock in gains. It ensures that traders do not get overly greedy and allows traders to capitalize on forex trades.
What is the time limit for forex trading? ›
The forex market opening time in India is from 9.00 a.m. to 5.00 p.m., with cross-currency trade continuing till 7.30 p.m. However, liquidity and variability are not always consistent over India's currency market hours. They differ due to overlapping trade sessions all around the globe.
How long can a trade last? ›
In the forex market, a trader can hold a position for as long as a few minutes to a few years. Depending on the goal, a trader can take a position based on the fundamental economic trends in one country versus another.
Why is forex open 24 7? ›
Forex can be traded using exchanges in different parts of the world from 5 p.m. EST on Sunday until 5 p.m. EST on Friday. The ability to trade forex over 24 hours is mostly due to different international time zones. Forex trading opens daily with Australia and Asia, then Europe, followed by North America.
Can I trade forex 24 hours? ›
Unlike the stock market, the Forex market is open 24 hours a day, although you have to consider that the market is closed for the majority of the weekend. The Forex market opens at 10pm GMT on Sunday, and is open continuously throughout the week, until it closes at 10pm GMT on Friday.
How long should you trade forex? ›
Common Forex Trading Time Frames
Day Trading (1-hour to 4-hours): Day traders hold their positions for a day or less, closing them before the market closes. Swing Trading (4-hours to daily): Swing traders hold their positions for a few days to weeks, aiming to capture larger price movements.
Long-term forex trading or investing consists of using a combination of fundamental analysis and risk management to be able to keep your active trades open for long periods of time. This allows you to enter trades that stay open for weeks, months or even years.
Is it possible to be a full-time forex trader? ›
A full-time job in forex trading is possible, but it takes commitment, discipline, and skill mastery. In addition, although forex trading has many benefits, such as reduced costs, flexibility, and possible profitability, it's important to recognize the risks and difficulties it entails.
Can you go long on forex? ›
Usually used in context as “going long” or “taking a long position“. When you trade in the forex market, since you buy or sell in currency pairs, “going long” means that you are buying the base currency and selling the quote currency. For example, if you go long EUR/USD, you are buying euros and selling U.S. dollars.
What happens if you leave a forex trade open over the weekend? ›
So, in short, nothing happens when you hold onto a forex trade over the weekend – you're unable to touch the position and won't have visibility on any changes in market price until the market reopens!
When should you not trade forex? ›
Most forex traders tend to avoid trading on major holidays, as well as on days when global news events are breaking.
Can you leave a forex trade overnight? ›
In Forex, when you keep a position open through the end of the trading day, you will either be paid or charged interest on that position, depending on the underlying interest rates of the two currencies in the pair.
Can you hold a forex trade overnight? ›
Forex traders will generally take the risk, cost of capital, leverage changes, and strategy into account when deciding to maintain an overnight position. The goal of keeping an overnight position is to try to increase profit on the trade by holding it overnight or by minimizing the loss of a losing daytime trade.
Do forex trades expire? ›
Forex options trade over-the-counter (OTC), and traders can choose prices and expiration dates which suit their hedging or profit strategy needs. Unlike futures, where the trader must fulfill the terms of the contract, options traders do not have that obligation at expiration.
What happens if you hold a forex trade over the weekend? ›
So, in short, nothing happens when you hold onto a forex trade over the weekend – you're unable to touch the position and won't have visibility on any changes in market price until the market reopens!
Can forex be long term? ›
Can you trade Forex long term? Many traders have heard of short term Forex trading. One of the common forms of short term trading is day trading. However, long term Forex trading is also quite popular.
