What is the best time to trade forex and Binary Options

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The Best Times to Trade Binary Options

Lesson 1: The Best Times to Trade Binary Options

Welcome to our new series on binary options trading for beginners, where we will take you by the hand and show you a systematic way to trade binary options. Today we will touch on the best times to trade binary options.

Binary options’ trading involves trading several assets and making money based on the outcome of the price direction. Some of these assets are traded on a 24-hour basis: here we have currencies, commodities and stock indices. Stocks are not usually traded on a 24-hour basis. The trading hours of a stock market determine the times at which a stock listed in that market is traded. When you take the time zones of the trading capitals of the world into consideration, this gives different trading hours for trading stocks on the binary options market.

The binary options market is one where traders make money based on predicting direction, and volatility is what gives price action direction in the market.

Trading works best when the market is bubbling with activity from traders all over the world. When there is good trader activity in the market, it generates the liquidity and volatility needed for the underlying asset to get to its target before the option expires.

Even though assets like currencies and commodities are supposed to be 24-hour markets, there are only certain times of the day when the market activity is at its maximum. This is usually when we have an overlap of the trading zones of the world.

Because not all assets have the same trading hours, we will discuss the various classes of assets as separate entities, taking into account their own peculiar trading hours.

Timing for Stocks

As we mentioned earlier, stocks are usually traded for a maximum of 6 to 8 hours a day. Stocks of most major companies outside the US are traded on the US stock markets as American Depository Receipts (ADR). As such, the US markets are used as the benchmark of checking the trading hours for stocks. US stock markets usually trade from 9.30am EST to 4pm EST.

However, there are other markets in Europe that are just as important, such FTSE (7am GMT to 3.30om GMT) and the Xetra Dax (8am GMT to 4.30pm GMT) in Germany. If you are trading stocks in the binary options market, pay attention to the times at which the stock markets in which they are listed are in operation.

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Timing for Currencies

The forex market is most active when there is an overlap of the London/Asian and London/New York time zones. The diagram below gives a perfect illustration of this.

You also need to know that the local currencies of the active time zones will have increased volatility over others. For instance, the Australian Dollar will be more active during the Asian/London time zone overlap than the London/New York time zone overlap.

Timing for Commodities

Commodity markets are most active at the following times:

Crude oil (NYMEX.CL) – 9am EST to 2.30pm EST

Natural gas – 9.30am EST to 5.15pm EST

Corn – 9.30am EST to 1.15pm EST

Gold – 8.20am EST to 5.15pm EST

Silver – 8.25am EST to 5.15pm EST

Another way of studying the trading times would be to group the commodities under the exchanges where they are traded. As such, the agricultural commodities, which are traded in the Chicago Mercantile Exchange, are more actively traded from 9.30am EST to 1.15pm EST and from 6pm EST to 7.15am EST the next day.

Full information on trading hours is available on the CME Group website.

Timing for Index Futures

Stock indices are CFD instruments that measure the movement of the relevant exchanges, As such, the DJ30, NASDAQ100 and S&P500 will conform to the US markets open from 9.30 am EST to 4.30pm EST, and the DAX30 will conform to that of the Xetra Dax’s trading hours.

Once you master the trading hours for each asset, you are one step away from potential profitability in the market.

Making Sense of Forex Market Hours

When you are starting out trading forex pairs, whether it be in the spot market or using binary options, there is a lot of basic information required. Many traders skip over this basic information, and instead seek out strategies immediately. The forex market is open 24-hours a day because banks/businesses are open at different times around the world, providing liquidity to forex pairs. Yet each hour of the day has different tendencies based on what part of the globe is open for business. Understand forex market hours, and hourly tendencies, and you’ll be better able to apply your strategies at opportune times.

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Forex Market Sessions

Major markets are open at different times throughout the day. Which market(s) is open directly affects the liquidity and volatility and forex pairs.

The EURUSD for example is most liquid and volatile during the London and New York sessions, especially during the “overlap” period when London and New York are both trading.

The USDJPY typically has the most volatility when Tokyo first opens, and when New York opens many hours later.

Currencies generally see increased liquidity when one or more markets that actively trade, or use, that currency are open for business.

Here are the forex sessions based on different time zones:

Figure 1. GMT

Figure 2. EST (New York)

These charts do not show every market in the world, although these are the major ones. The Canadian market is open while New York is open, and London overlaps with other European markets.

Germany opens one hour before London; therefore, some consider that to be the open, and not the start of the London session. Volatility, on average, doesn’t see a marked increased until London opens though.

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Those major sessions directly impact currency pair volatility. The charts below show hourly volatility. If your strategy is based on volatility or you’re using a trending strategy, focus on times of day where the price moves are largest. The “spikes on the chart” are ideal times, as the price needs to be making higher highs or lower lows in order for volatility to increase during that time (see: Trading Efficiently – The 2 to 3 Hour Trader).

If you are using more of a range trading strategy, or prefer low volatility, trade during the sedate times, where the charts show decreased hourly volatility.

All figures below are current as of January 9, 2020. While subject to change, the charts provide a good overall context for relative intra-day volatility.

Figure 3.

8 to 17 GMT provide the best trending opportunities, with 13 to 17 generally providing the biggest moves.

Those seeking reduced volatility, or times more likely to quietly range, trade between 20 and 5 GMT.

The USDCHF is very similar to the EURUSD in terms of its hourly volatility structure, although the USDCHF moves less overall each day and therefore overall hourly volatility is several pips less.

Figure 4.

Figure 5.

Figure 6.

The NZDUSD has very similar hourly volatility to the AUDUSD, and they both move roughly the same amount each day.

Currently updated volatility charts and other forex statistics are available at Daily Forex Stats.

Learning the basics, such as what the market sessions and hours mean to you as a trader, can significantly help in determining what strategies to exercise and when. No matter what time frame you trade on, you should have a checklist which helps you determine what type of market environment you are trading in. This will also help with filtering trades and capitalizing on good opportunities.

Best Time to Trade Binary Options

Trading is tough and it is often time consuming. If you could somehow know exactly when prices are most likely to change, you could significantly cut down on the amount of time you actually spent trading and put that extra time to a better use somewhere else.

Risk Warning – “Investors can lose all their capital by trading binary options”
Luckily, you can determine the best time to trade and this can have a big impact on the rest of your life. No one wants to spend all day in front of the computer, and figuring out when the best time to trade binary options can help you find more free time.
Recognizing when trading volume is at its highest is the first step to figuring out the best times to trade. For stocks, this is pretty easy to figure out. The most action occurs when the trading day is first starting out and right before the end of the day. However, many binary options brokers do not allow for trading underlying stocks during the first half hour of the regular trading day. This means that you should focus on after this time period has passed. For U.S. stocks, this is going to be at around 10:00 or 10:30. This will vary from each broker.

However, trading other assets is a bit trickier. You want to make sure that there will be definite movement; trading when there is little or no movement drastically increases your risk of being wrong in your predictions. You might think that this is a tough question since many assets are traded around the clock, but there are definite patterns that arise as to when the most movement occurs.

For example, currencies generally see the most movement when certain markets close. The Japanese yen is closely connected to Japan’s open market times. If you are trading the USDJPY currency pair, knowing when Japan’s trading day begins and ends will help you to figure out the best times to trade. For U.S. traders, the Japanese market day begins at 7:00 PM Eastern time and closes at 3:00 AM Eastern when you look at Tokyo’s times. The half hour blocks immediately near these times is going to see the most movement for the yen.

If you are trading the Euro, you will want to look at European trading times and adopt a similar strategy to trading as you would take on for the yen. The European market (Frankfurt) is open from 2:00 AM Eastern to 10:00 AM Eastern.

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Commodities are a bit more difficult to determine when you should trade them. These underlying assets are universal in their trading times and are not unique are pertinent to any one marketplace. For these, looking at economic events is going to be in your best interest. Certain nations will release reports or news in regard to the major commodities at certain times and being aware of when these things will be released is a key part of anticipating market movements. This does make analyzing commodities a bit more difficult than trading other assets, but knowing when commodities are most likely to move, you are giving yourself a big advantage and saving yourself a lot of effort.

This is called sentimental analysis and can easily carry over to other types of assets, too. Knowing when a company is going to make a major announcement can help you to more efficiently trade stocks and having an idea of when a Central Bank is going to release interest rates can help you to better trade currency.

Trading in this manner will not give you a set trading time from day to day, but it will easily reduce the amount of time you spend actively trading. Managing your time will allow you to trade smarter and reduce the amount of time you waste each day.

[su_spoiler title=”Risk Warning”]Have in mind that investors can lose all their capital by trading binary options.[/su_spoiler]

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