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- Crude Oil is On the Move! Trade 10 Contract Sides on Us
- Lind Forex: A Better Way to Trade FX! 20 Sides on Us
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View additional market commentary on InsideFutures.com
In This Issue:
Greg Perlin discusses the best time of day
to trade Futures Contracts.
|October 25, 2007||TraderSavvy.com | Read Past Issues|
"Your vision. Our expertise."
Finding Optimal Days and Times to Trade
I’ve been asked if there are some times during the day, or days during
the week, that seem to offer better trading opportunities than others.
With the era of electronic trading, you can now trade a variety of futures
products around the world, around the clock. And, there are opportunities
at all times of the day or night for traders. It really depends on what
market you are trading, but as a general rule, you want to trade during
the most liquid times of the day—times when it’s easier to get in and out
of a trade because there are a variety of market participants trading and
volume is robust. For U.S. markets, that’s generally traditional U.S.
business hours, but some markets have more overnight activity than others.
So, pay attention to volume at the time you want to trade, for the market
you want to trade.
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For example, if you trade S&P futures, the hours surrounding the regular day’s opening (8:30 a.m. CT) and closing (3:15 p.m. CT) tend to be the most active times. In the early morning, market participants are absorbing events that have happened overnight both here and abroad, and many key U.S. economic reports, such as the monthly employment report, are released before 10:00 a.m. C.T. Toward the end of the regular trading day, short-term traders are wanting to close out positions, and other participants are making last-minute decisions on where they see the market headed next. As our stock market is a global market, there is also significant overnight activity in stock index futures during times of turmoil such as war, or elections. But for the most part, traders in the U.S. still do follow a regular business day—and that’s usually when the most activity is.
Generally speaking, if you want to trade overnight, I’d stick with the biggest, most liquid markets that have a variety of active global participants. Markets such as the Treasury futures, stock index futures and currencies are examples. We typically see about a quarter of the volume take place overnight versus the daytime session in these markets, but the markets are still active, and tight. A market such as livestock, for example, is still largely a domestic market and doesn’t see as much activity overnight, so that's one I wouldn't recommend trading overnight.
Also, keep in mind the regular trading hours of your chosen market, which differ. Europe’s regular market opening comes at 1:00 a.m. C.T, so if you want to trade the euro, or a European stock index product, these could be good vehicles for night owls. In Japan, their regular trading starts at 6:00 p.m. C.T., so if you trade the Nikkei 225 or the yen, that time can be active. Today, all global markets tend to feed off each other and what moves one of these markets overnight could have an impact on our market when our day begins, too.
The other factor to consider is also specific events that might provide good opportunities for the particular market that you trade. Volatility, and uncertainty, creates trading opportunities in futures markets, and each market has its own fundamental drivers. For example, if you trade crude oil futures, you’d want to know that every Wednesday morning, the U.S. government releases crude oil inventory data. That report tends to cause the market to move, and can trigger a shift in trend. If you trade Treasury markets, days the Federal Reserve Board is scheduled to meet are likely to create a lot of excitement, and movement. If you trade the yen, find out when the Bank of Japan meets. You may not always want to be trading during one of these events, as the market can move very quickly against you if you are wrong. But, even if you are purely technical trader, it’s good to know when a shift in trend could be coming, and you can set up accordingly once the initial knee-jerk market reaction has time to settle down.
If you are unsure, I recommend working with a professional to determine
which markets you feel might fit your particular trading style, timing,
and risk tolerance. Feel free to contact me with any questions you have on
this topic, or others.
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About Today's Author:
Greg Perlin is a Senior Market Strategist with Lind Plus, Lind-Waldock's broker-assisted division. A former CBOT member, Greg has been active in the industry for about 14 years as an independent floor trader, pit broker and floor broker with Cantor Fitzgerald, and as desk manager for Cantor's morning trade desk. For his Lind Plus clients, he brings the ability to remain calm through both adversity and prosperity, creating a solid foundation from which to develop market strategies. He believes success in trading commodities involves hard work and discipline, as well as a common-sense, flexible approach toward fundamental and technical analysis. He can be reached at 800-437-4189 or via email at email@example.com.
You can also hear timely market commentary and trading strategies from Greg and other Lind Plus Senior Market Strategists through Lind-Waldock’s weekly Markets on the Move webinars. These events are free to attend, and you can ask questions via live online chat. Sign up at www.lind-waldock.com/events.
Past performance is not necessarily indicative of future trading results. Trading advice is based on information taken from trade and statistical services and other sources which Lind-Waldock believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder.
Futures trading involves substantial risk of loss and may not be suitable for all investors. © 2007 MF Global Ltd. All Rights Reserved. Lind-Waldock. Futures Brokers, Commodity Brokers and Online Futures Trading. 141 West Jackson Boulevard, Suite 1400-A, Chicago, IL 60604.