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 are going to cover the best times to trade binary options.
Lesson 1: The Best Times to Trade Binary Options
Binary options trading involves trading multiple assets and making money based on the outcome of price direction. Some of these assets are traded 24 hours a day: here we have currencies, commodities and stock indices. Stocks are generally not traded 24 hours a day. The trading hours of a stock market determine the times that a stock listed on that market is traded. When you take into account the time zones of the trading capitals of the world, this gives you different trading hours for trading stocks in the binary options market.
The binary options market is one where traders make money based on the direction of the forecast, and volatility is what gives the 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 necessary for the underlying asset to reach 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 day when market activity is at its peak. This usually occurs when we have an overlap of the world's trading zones.
As not all assets have the same trading hours, we will discuss the various asset classes as separate entities, taking into account their own peculiar trading hours.
time for actions
As we mentioned earlier, stocks are usually traded for a maximum of 6-8 hours a day. The shares of most large companies outside the US are traded on US stock exchanges as American Depository Receipts (ADR). As such, US markets are used as a reference for checking stock trading hours. US stock markets generally trade from 9:30 am EST to 4 pm EST.
However, there are other markets in Europe that are just as important, such as the FTSE (7am GMT to 3:30am GMT) and Xetra Dax (8am GMT to 4:30pm GMT) in Germany. If you are trading stocks on the binary options market, pay attention to the times when the stock markets they are listed on are in operation.
time for coins
The forex market is most active when the London/Asia and London/New York time zones overlap. The diagram below perfectly illustrates this.
You also need to know that the local currencies of active time zones will have higher volatility compared to others. For example, the Australian dollar will be more active during the Asia/London time zone overlap than the London/New York time zone overlap.
time 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 – 8:25 am EST to 5:15 pm EST
Another way of studying trading times would be to group commodities on the exchanges where they are traded. As such, agricultural commodities, which are traded on the Chicago Mercantile Exchange, are most actively traded from 9:30 am EST to 1:15 pm EST and from 6 pm EST to 7:15 am EST the following day.
Full information on trading hours is available on the CME Group website.
Weather for Index Futures
Stock indices are instruments of CFD that measure the movement of the relevant exchanges, as such, the DJ30, NASDAQ100 and S&P500 will comply with US markets open from 9:30 am EST to 4:30 pm EST, and the DAX30 will comply with Xetra Dax's Business hours.
Once you master the trading hours for each asset, you are one step closer to potential profitability in the market.