Best Time To Trade
It is always important to consider volatility in the market before trading. In other words, you want other traders actively taking trades in the market in order to have large fluctuations and movements. If there is low volatility then the market will consolidate or move "sideways" thus not allowing the indicator to predict moves as easily. Volatility is normally found during times when markets first open.
Let's cover the best times to trade in specifc markets.
The market open and market close will have the highest amount of volume & volatility. These are the times we want to target.
- Power Hours for FOREX occur when exchanges overlap. A great example is the overlap of London and New York exchanges which can cause large movements. (8-11 a.m. EST)
- Power hour is also considered the last hour of any exchange as many traders and institutions want their money out of the market before the exchange or trading day ends.
- Be careful getting into trades near the close of exchanges to avoid fees like Swap fees (swap fees only apply to MT4 traders). At night if you are trading with an MT4 Broker you will also experience higher spreads.
- *It is important to remember that although exchanges are open for an extended period of time Volatility is important. Volatility or the amount of traders trading at a certain time varies. But, normally we know that the first few 2-3 hours of each trading session are highly volatile and are prime times to trade. The 1-2 hours at the end of a session can have surges of volatility as well.
Usually the best time to trade stocks is the opening of the New York Stock Exchange at 9:30 AM EST.
Normally the open of the NY Exchange is VERY volatile and any pre-market analysis you have made can be completely invalid. It is very important to protect trades during high volatile times and practice before trading during this time.
Lunch hour is from 11:30 AM EST to 2 PM EST. Usually, you want to avoid these times at all costs due to volatility going flat during these times.
The last 2 hours the market is open (2-4 PM EST) can be great times to trade as well. In fact, common intraday stock market patterns sho the last hour can be just like the first - sharp reversals and big moves, especially in the last several minutes of trading. during these times, day traders are often trying to close out their positions, or they may be attempting to join a late-day rally in the hope that the momentum will carry forward into the next trading day.
- Crypto currencies are one of the only markets that run 24/7, since it doesn’t rely on any central banking system or exchange that it needs to abide by.
- Crypto Currencies however do have higher volatility times even though it is open 24/7. We can find surges of movement when the larger exchanges are open like the London and New York exchange. We can find movement during the off hours of the market as well, but it is very important to not overtrade on markets that are open 24/7