The Best Time to Trade

Best Binary Options Brokers: 2020 Ranking
  • Binarium
    Binarium

    Best Choice! The leader in our ranking!
    Perfect for beginners!
    Free Demo Acc + Free Trading Education!

  • Binomo
    Binomo

    Good choice for experienced traders!

When is the Best Time of Day to Trade Forex?

Summary:

  • For most forex traders, the best time of day to trade is the Asian trading session hours.
  • European currency pairs such as EUR/USD show the best results .

We analyzed over 12 million real trades conducted by a major FX broker, and we found that trader profits and losses could vary significantly by time of day. That data showed that most traders are what are called “ Range Traders ,” and their successes and failures very much depend on market conditions. In fact, this trading style means that many of them have trouble being successful in forex because they are trading during the wrong time of day.

Most forex traders are more successful during the late US, Asian or early European trading sessions – essentially 2 PM to 6 AM Eastern Time (New York), which is 7 PM to 11 AM UK time.

Why? We’ve seen records for thousands of traders, and the chart below shows a noteworthy trend pulled from real trades conducted by clients of a major FX broker from 2009-2020. The chart shows the profitability of traders with open positions broken down by hour of day across the five most popular currency pairs.

Those profitability statistics can certainly vary on a day-to-day basis, but the patterns are impressively stable over the course of the year. But how does time of day affect the average trader’s profitability?

You can see that periods of strong trader performance line up with low-volatility trading hours. Traders tend to see the best results during the Asian trading session, and the chart below shows that the Euro tends to move far less through this period. To see why volatility lines up so well with performance, we need to look at real trader behavior.

Range trading strategies can be summarized quite simply—buy low/sell high. If a currency has fallen and is trading at or near significant support levels , the range trader will often buy. If the same currency then trades higher and near important resistance, that same trader sells. This can work if price is not breaking major price levels and continues trading within relatively narrow ranges.

Of course that same trader would do quite poorly if price broke significantly above resistance or below support. How do we avoid the worst market conditions for this particular style of trading?

Do the Hours that I Trade Matter?

Yes, they matter a lot.

We have constructed a strategy that closely models your “typical trader”. We simulated the strategy’s performance trading the EUR/USD 24 hours a day over the past ten years. The results are not good.

Euro/Dollar RSI Range Strategy Performance, Trading 24 Hours

Trade Rules for the RSI Trading Strategy

Buy Rule : When the 14-period RSI crosses above 30, buy.

Sell Rule : When RSI crosses below 70, sell.

Best Binary Options Brokers: 2020 Ranking
  • Binarium
    Binarium

    Best Choice! The leader in our ranking!
    Perfect for beginners!
    Free Demo Acc + Free Trading Education!

  • Binomo
    Binomo

    Good choice for experienced traders!

Yet once we factor in the time of day, things become interesting. We know that the Euro tends to move less through certain hours—let’s use that to our advantage and make a rule to trade only during low-volatility times.

This next chart shows the exact same strategy over the exact same time window, but the system does not open any trades during the most volatile time of day, 6 AM to 2 PM Eastern Time (11 AM to 7 PM London time). The difference is dramatic.

Euro/US Dollar RSI Strategy Restricted to Trade between 2:00 PM and 6:00 AM Eastern Time

Trade Rules for the RSI Asia Range Trading Strategy

Buy Rule : When the 14-period RSI crosses above 30, buy.

Sell Rule : When RSI crosses below 70, sell.

Trade Filter : Only allow the strategy to open trades after 06:00 and before 14:00 Eastern Time.

By sticking to range trading only during the hours of 2pm to 6am, the typical trader would have hypothetically been far more successful over the past 10 years than the trader who ignored the time of day.

What About Other Currency Pairs?

Of course, not all currencies act the same. For example, the Japanese Yen tends to see more volatility during Asian hours than the Euro or British Pound; these are the hours of the Japanese business day.

We simulated the same filter as we used with the Euro/US Dollar. The poor results speak for themselves.

We find that the time filters have historically worked well for European currency pairs such as the Euro/US Dollar and the US Dollar/Swiss Franc. The filters also work fairly well for the GBP/USD. We might range trade these currency pairs during the 2 PM to 6AM time window.

Unfortunately, our optimal time window does not work well for Asian currencies. Our tests of different time windows on the USD/JPY, AUD/USD, and NZD/USD have not produced a single positive equity curve over the past 10 years. This is due to the fact that these currencies are more often subject to large moves during Asia Session than the European currencies.

Game Plan: What Strategy Should I Use?

Trade European currencies during the “Off Hours” using a range trading strategy.

Our data show that over the past 10 years, many individual currency traders have been successful range trading European currency pairs during the “off hours” of 2 PM to 6 AM Eastern Time (7 PM to 11 AM UK Time).

Many traders have been very unsuccessful trading these currencies during the volatile 6 AM to 2 PM time period.

Asia-Pacific currencies can be difficult to range trade at any time of day, due to the fact that they tend to have less distinct periods of high and low volatility.

Model Strategy: Range Trading with RSI on a 15 Minute Chart

For our models, we simulated a “typical trader” using one of the most common and simple intraday range trading strategies there is, following RSI on a 15 minute chart.

Trade Rules for the RSI Asia Range Trading Strategy

Buy Rule : When the 14-period RSI crosses above 30, buy.

Sell Rule : When RSI crosses below 70, sell.

Trade Filter : Only allow the strategy to open trades after 06:00 and before 14:00 Eastern Time.

Why does the average trader lose money? We studied over 30 million trades to help you become a more consistent trader. On page 4 of our Traits of Successful Traders Guide , we discuss the most common trading mistakes.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

Is there a Best Time of Day to Trade?

As the popularity of investing according to computerized algorithms increases, the question “When is it best to trade?” arises. Each investor has a different answers and opinion when it is best to trade. We approach this subject analytically to find a mathematical generated answer that is void of any emotions. We took two algorithmic trading models, both trading in highly liquid ETFs, and analyzed the return generated when traded at opening, closing and randomly between the day’s high and low prices. Our conclusion: there is no best time of day when to trade; it is model dependent and only by doing a statistical analysis can a recommendation for a particular model be made.

Method

A MS Excel workbook was set up to calculate the profit and loss of a model’s trading history using historic prices and dividends. All profits and dividends were reinvested. The worksheet has the limitation that only one ETF can be held at any time. The performance of the model was calculated when:

  1. Trading at opening price,
  2. trading at closing price,
  3. buying at opening and selling at closing price,
  4. selling at closing and buying at opening price,
  5. trading at a random price between the days’ high and low. This was repeated 2000 times to obtain data for near life like trading, which can be statistically analyzed.

Contrary to web based trading simulations that include a fixed percentage slippage from the day’s closing price, no slippage was applied to the trades. However, for each transaction a $10 fee was included.

Analyzing a Low Turnover ETF Switcher

On a web-based trading simulation platform we developed a model, Best(SPY-TLT), that switches between SPY (SPDR® S&P 500® ETF) and TLT (iShares 20 Plus Year Treasury Bond ETF) depending on market direction.

The market timing rules use volatility, risk premium, earnings estimates together with moving average cross-overs and includes the following parameters:

  1. Daily close of CBOE Volatility Index – VIX,
  2. weekly estimate S&P500 Risk Premium – which is the difference between the Current Estimated Earnings Yield of the S&P500 and the Treasury 10-yr Note Yield,
  3. weekly evaluation of the Current Year Earnings Per Share Estimate of the S&P500,
  4. and the daily closing price of SPY adjusted for dividends.

This model algorithm generates over weekends a recommended trade to be executed on Mondays. In the fourteen years (Jan 2000 to Dec 2020) the simulation resulted in 63 completed trades, i.e. an average of 9 transactions each year, which approximates to an average annual portfolio turnover of 450%. The results of our investigation are listed in Table 1 and shown graphically in Figure 1.

In Figure 1 the resulting compounded average annual growth rate (CAGR) and maximum drawdown of two thousand simulated trades are shown in the two histograms. The analysis is enhanced with a scatter diagram of CAGR vs. drawdown in a form of a scatter plot (one point for each simulation run) and the evaluation of it to give a smoothed probability density in a 3D view. The scatter diagram indicates a small variance in CAGR and drawdown and the investor is given a very good idea of what to expect from the model according to his trading practice.

What happens if we add some volatility to this model by replacing SPY with SSO (ProShares Ultra two times daily S&P500 ETF)? The results are listed in Table 2 and shown graphically in Figure 2.

As expected the variance in CAGR and drawdown increases with the added volatility. (When comparing the probability distribution please note that the ‘mountain’ in the latter case is rather flat when compared to the first case, note the vertical scales)

Conclusion.

There is no conclusive answer to the question “Is there a best time to trade?” However, it would be wise to follow closely the declared price (open or close) the model uses for its simulated performance calculation.

How would the variance in performance be effected by the number of holdings, stock type, and turnover of trading model? More sophisticated methods than spreadsheet applications are needed to analyze this, and could be answered if web trading platforms perform a study similar to the above presentation. Not only will it give an investor a better idea what to expect from the model, it will also give a further criterion for evaluating it.

Footnote

The low turnover ETF switcher is described in iM-Best(SSO-TLT) Switching System. Furthermore, you can download the MS Excel Workbook.

The Best Times of the Day to Buy and Sell Stocks

The Balance 2020 / Miguel Co

Sometimes less is more when it comes to day-trading. Devoting two to three hours a day is often better for most traders of stocks, stock index futures, and index-based exchange-traded funds (ETFs) than buying and selling stocks the entire day, for a couple of reasons.

Specific hours provide the greatest opportunity for day-trading, so trading only during these hours can help you maximize your efficiency. Trading all day takes up more time than necessary for very little additional reward. In many cases, even professional day traders tend to lose money outside of these ideal trading hours.

Avoiding Mental Fatigue

Additionally, day-trading requires discipline and focus, both of which are like muscles. Overwork them and the muscles give out. Trading only two to three hours a day keeps you on your game, and it likely won’t lead to the mental fatigue that can negatively affect your work. Trying to trade six or seven hours a day can drain you and make you more susceptible to mistakes.

Of course, everyone has different focus and discipline levels. Some traders might be able to buy and sell all day and do it well, but most do better by trading only during the few hours that are best for day-trading.

Trading at the Opening

Trading during the first one to two hours that the stock market is open on any day is all many traders need. The first hour tends to be the most volatile, providing the most opportunity. Although it sounds harsh, professional traders know that a lot of “dumb money” is flowing at this time.

Dumb money is the phenomenon of people making transactions based on what they read in the newspapers or saw on TV the night before. The information these people are acting upon is typically old news. Their trades can create sharp price movements in one direction. Then professional traders take advantage of the overly high or low price and push it back the other way.

New day traders are often told not to trade during the first 15 minutes of the day, and that might be good advice for very new traders, but the first 15 minutes typically offers the best opportunities for seasoned traders. This time period can provide the biggest trades of the day on the initial trends.

Ending by 11:30

Regular trading begins at 9:30 a.m. ET, so the hour ending at 10:30 a.m. ET is often the best trading time of the day. It offers the biggest moves in the shortest amount of time. If you want another hour of trading, you can extend your session to 11:30 a.m. ET.

A lot of professional day traders stop trading around 11:30 because that’s when volatility and volume tend to taper off. Trades take longer, and moves are smaller on lower volume—not a good combination for day-trading.

If you’re day-trading index futures such as the E-mini S&P 500 (ES) or an index-based ETF such as the SPDR S&P 500 (SPY), you can begin trading as early as 8:30 a.m. during premarket hours and begin tapering off at around 10:30 a.m. That provides a solid two hours of trading, usually with a lot of profit potential.

As with stocks, trading can continue up to 11:30 a.m. ET, but only if the market is still providing opportunities to capitalize on the trading strategies you’re using.

The Last Hour

Many day-traders also trade the last hour of the day, from 3 to 4 p.m. ET. By that time, traders have had a long break since the morning session, allowing them to regroup and regain their focus.

The last hour can be a lot like the first when you’re looking at common intraday stock market patterns. It’s full of bigger moves and sharp reversals. Like the first hour, many amateur traders jump in during the last hour, buying or selling based on what has happened so far that day. Dumb money is once again floating around, although not as much as it was in the morning. It’s ready to be scooped up by more experienced money managers and day traders.

The last several minutes of trading can be particularly active, with big moves on high volume.

The Best Days and Months

Keep the bigger picture in mind, too, beyond the hourly grind. Monday afternoon is usually a good time to buy because the market historically tends to drop at the beginning of the week, particularly around the middle of the month. Many experts recommend selling on Friday before that Monday dip occurs, particularly if that Friday is the first day of a new month or when it precedes a three-day weekend.

Likewise, prices tend to drop in September and then hike again a month later. October is generally positive overall, and prices often go up again in January, particularly for value and small-cap stocks.

The Best Times to Trade the Forex Markets

Many first-time forex traders hit the market running. They watch various economic calendars and trade voraciously on every release of data, viewing the 24-hours-a-day, five-days-a-week foreign exchange market as a convenient way to trade all day long. Not only can this strategy deplete a trader’s reserves quickly, but it can burn out even the most persistent trader. Unlike Wall Street, which runs on regular business hours, the forex market runs on the normal business hours of four different parts of the world and their respective time zones, which means trading lasts all day and night.

So what’s the alternative to staying up all night long? If traders can gain an understanding of the market hours and set appropriate goals, they will have a much stronger chance of realizing profits within a workable schedule.

The Forex Markets Hours of Operation

First, here is a brief overview of the four markets (hours in Eastern Standard Time, or EST):

  • New York (open 8 a.m. to 5 p.m.): New York is the second-largest forex platform in the world, watched heavily by foreign investors because the U.S. dollar is involved in 90% of all trades, according to “Day Trading the Currency Markets” (2006) by Kathy Lien.   Movements in the New York Stock Exchange (NYSE) can have an immediate and powerful effect on the dollar. When companies merge, and acquisitions are finalized, the dollar can gain or lose value instantly.
  • Tokyo (open 7 p.m. to 4 a.m.): Tokyo, the first Asian trading center to open, takes in the largest bulk of Asian trading, just ahead of Hong Kong and Singapore. The currency pairs that typically have a fair amount of action are USD/JPY, GBP/CHF, and GBP/JPY. The USD/JPY is an especially good pair to watch when the Tokyo market is the only one open, because of the heavy influence the Bank of Japan has over the market. 
  • Sydney (open 5 p.m. to 2 a.m.): Sydney is where the trading day officially begins. While it is the smallest of the mega-markets, it sees a lot of initial action when the markets reopen on Sunday afternoon because individual traders and financial institutions are trying to regroup after the long pause since Friday afternoon.
  • London (open 3 a.m. to noon): The U.K. dominates the currency markets worldwide, and London is its main component. London, a central trading capital of the world, accounts for roughly 43% of global trading, according to a report by BIS.   The city also has a big impact on currency fluctuations because the Bank of England, which sets interest rates and controls the monetary policy of the GBP, has its headquarters in London.   Forex trends often originate in London as well, which is a great thing for technical traders to keep in mind.

The Best Hours for Forex Trading

Currency trading is unique because of its hours of operation. The week begins at 5 p.m. EST on Sunday and runs until 5 p.m. on Friday.

Not all hours of the day are equally good for trading. The best time to trade is when the market is most active. When more than one of the four markets are open simultaneously, there will be a heightened trading atmosphere, which means there will be more significant fluctuation in currency pairs.

When only one market is open, currency pairs tend to get locked in a tight pip spread of roughly 30 pips of movement. Two markets opening at once can easily see movement north of 70 pips, particularly when big news is released.

Overlaps in Forex Trading Times

The best time to trade is during overlaps in trading times between open markets. Overlaps equal higher price ranges, resulting in greater opportunities. Here is a closer look at the three overlaps that happen each day:

  • U.S./London (8 a.m. to noon): The heaviest overlap within the markets occurs in the U.S./London markets. More than 70% of all trades happen when these markets overlap because the U.S. dollar and the euro are the two most popular currencies to trade, according to Lien. This is the most optimal time to trade since volatility is high. 
  • Sydney/Tokyo (2 a.m. to 4 a.m.): This time period is not as volatile as the U.S./London overlap, but it still offers a chance to trade in a period of higher pip fluctuation. EUR/JPY is the ideal currency pair to aim for, as these are the two main currencies influenced.
  • London/Tokyo (3 a.m. to 4 a.m.): This overlap sees the least amount of action of the three because of the time (most U.S.-based traders won’t be awake at this time), and the one-hour overlap gives little opportunity to watch large pip changes occur.

Impact of News Releases on Forex Markets

While understanding the markets and their overlaps can aid a trader in arranging his or her trading schedule, there is one influence that should not be forgotten: the release of the news.

A big news release has the power to enhance a normally slow trading period. When a major announcement is made regarding economic data—especially when it goes against the predicted forecast—currency can lose or gain value within a matter of seconds.

Even though dozens of economic releases happen each weekday in all time zones and affect all currencies, a trader does not need to be aware of all of them. It is important to prioritize news releases between those that need to be watched versus those that should be monitored.

Examples of significance news include:

  • Interest rate decisions
  • CPI data
  • Trade deficits
  • Consumer consumption
  • Central bank meetings
  • Consumer confidence
  • GDP data
  • Unemployment rates
  • Retail trade

The Bottom Line

It is important to take advantage of market overlaps and keep a close eye on news releases when setting up a trading schedule. Traders looking to enhance profits should aim to trade during more volatile periods while monitoring the release of new economic data. This balance allows part-time and full-time traders to set a schedule that gives them peace of mind, knowing that opportunities are not slipping away when they take their eyes off the markets or need to get a few hours of sleep.

US Search Desktop

We appreciate your feedback on how to improve Yahoo Search. This forum is for you to make product suggestions and provide thoughtful feedback. We’re always trying to improve our products and we can use the most popular feedback to make a positive change!

If you need assistance of any kind, please find self-paced help on our help site. This forum is not monitored for any support-related issues.

The Yahoo product feedback forum now requires a valid Yahoo ID and password to participate.

You are now required to sign-in using your Yahoo email account in order to provide us with feedback and to submit votes and comments to existing ideas. If you do not have a Yahoo ID or the password to your Yahoo ID, please sign-up for a new account.

If you have a valid Yahoo ID and password, follow these steps if you would like to remove your posts, comments, votes, and/or profile from the Yahoo product feedback forum.

  • Голосовать за существующую идею ( )
  • или
  • Опубликовать идею…
  • Горячие идеи
  • Лучшие идеи
  • Новые идеи
  • Раздел
  • Статус
  • Моя обратная связь

Web surfers signed into yahoo, add like to search results

Webs surfers signed into yahoo, can add ‘like’ to search results. Example, I search for new cars. If logged in, I can scan yahoo search results. I click on a new yahoo! icon for a ‘yahoo! shout’, same a ‘like’ feature (i.e., facebook), letting the system know, which of the results I liked.

someone is listing viagra on my web site mwe3.com can you ask them to take it down! It is a music reviews site and not a viagra website!!

someone is listing viagra on my web site mwe3.com can you ask them to take it down! It is a music reviews site and not a viagra website!!

What a stuffed search engine. How about results of the actual item we are looking for.

Results that are actually relevant to a search would make life more enjoyable. Not interested in all the totally unrelated **** you allow to appear as “results”.

Best Binary Options Brokers: 2020 Ranking
  • Binarium
    Binarium

    Best Choice! The leader in our ranking!
    Perfect for beginners!
    Free Demo Acc + Free Trading Education!

  • Binomo
    Binomo

    Good choice for experienced traders!

Like this post? Please share to your friends:
Binary Options Trading Education
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: