How to Trade Around the Market Opening Hours
Markets have certain times when they’re most active, with the highest volume, which gives better opportunities for trading and lower transaction costs. These times are based on the major financial hubs like Europe, North America, and Asia, with the most activity occurring during overlapping sessions.
What Are the Session Hours?
There are many markets which are open around the clock. But should you also be trading all day and night? Probably not.
Many assets are traded on exchanges, and these exchanges have regular trading hours. Take the London Stock Exchange, it’s trading hours are from 8AM to 4:30PM GMT.
There are some assets which aren’t limited by these restrictions, like FX and commodities. However, they still have regular trading hours where they are more active and have the most volume.
Trading outside these times means the markets are going to move less, and the spread, which is the cost of trading, will also be wider. You’ll end up paying more for less of a move. That doesn’t sound all that great.
For the market sessions, they tend to follow the major financial hubs around the world. The big ones are the European session, the North American session, and the Asian session. In fact, the most volume will be at the crossovers.
When you’re planning what hours you want to trade, you’ll also want to take into account these sessions. However, there are more reasons to know when these sessions are, particularly the opens and closes.
When a session starts, it often causes volatility in the markets, and could even lead to a turning point. A particularly volatile one is when the North American session begins. Watch it next time and you’ll see what I mean. You’ll also notice many economic releases near the opens which can also create volatility.
These bits of volatility could impact our trading, it’s usually best to avoid entering a trade right before the session opens as it could immediately push through your stop loss. It can also completely change the behaviour of the market too.
The first hour of a session is usually the most important. This is also known as the initial balance and the movements that happen during this time can determine what will happen for the rest of the session. For example, whether or not the market is going to range or trend.
What Times Should You Trade?
Ideally you want to trade when a market is in session. If you are limited to what times you can trade then you’ll want to pick markets that are in session during that time.
You’ll also want to keep in mind when exchanges are opening or closed, as that could disrupt your trades and analysis.
If you're unsure about any of this, such as which markets are more active in which sessions, your broker or Google will be able to help you. I'd recommend setting alerts to stay on top of when session times are starting or ending or keep a chart showing the sessions across the world.