So, you decided you want to trade the markets, currencies and stocks. Knowing what time of the day to trade is crucial, especially when you’re making trades early in your investing career.
The markets trading hours is one of the frequently asked questions. Even I read somewhere that if you want to become a successful trader, you have to move to the time zone which is more convenient to trade during the most important trading hours. This is really interesting. You want to become a trader to be your own boss and work and make money from the comfort of your home. Now, all of a sudden some people suggest you to migrate to another time zone.
Let’s learn what the markets’ hours are and then decide to choose the best one.
This is true that the currency market is open 24 hours per day and 5 days per week (it opens on Sunday afternoon at 5 pm Eastern time and closes on Friday afternoon at 5 pm Eastern time). But there is more price movements during some special hours of the day. There are three primary trading sessions on the currency trading market:
- US or New York session
- European or EU or London session
- Asian session
Just the same, you can trade during hours when sessions overlap. They take place during the following hours as expressed in EDT (New York) time:
- New York – 8:00 am to 5:00 pm
- Asian – 7:00 pm to 4:00 am
- London – 3:00 am to 12:00 pm (noon)
Generally speaking, if you trade during the European, US, or both sessions, it’s because you are looking to capture big moves or a lot more pips. At the start of each and every session you will face an ultimate challenge: Is today’s market going to be trending or ranging? If it is a trending market, will the trend continue from yesterday or will it be a reversal? In the event it is a reversal, such a market can be quite brutal, but how brutal will it be? Because what will happen during these sessions is so hard to predict and what makes it really frustrating is that when you start out in the morning, you can never tell what will happen by noon.
The Asian session is calm 95% of the time. Although it pretty much behaves the same each day, it is still affected by what happened during the other two preceding it. Hence, it is very predictable and traders know what they’re up against. This allows you to create a more reliable and accurate trading system for day trading and scalping. So, if the EU and the US trading sessions were trending downward, you can say that when entering the Asian market hours, there are not going to be many price moves. The price channel is not going to be sideways either. Still, there will be predefined highs and lows for that channel because again, the Asian session behaves according to trade activity that happened during the day. Hence, we can predict price action during the night hours of the markets.
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Does It Mean Asian Market Hours Is The Best For Day Trading?
These are the top eight benefits of trading on the Asian session:
1. No news releases:
Some traders thing that news release is great for day trading. But this is not true at least for the beginners. They (news) are unpredictable and so hard to control, so its best to ignore them. They are also devastating to systems and robots on the trading platform.
2. No huge price swings:
As the two big sessions are closed and there is no big transactions, there is no big and strong movements, and also the stop losses are more stable.
3. Clear, well-defined price patterns:
There are no unpleasant surprises as big spikes and dips or sideways movements as what goes on during the Asian market hours is governed by what happened during the previous two sessions.
4. Quick trades and fast take profits:
This makes your objected profit easier to reach as no surprise elements will interfere with your goal.
5. Risk/reward/trade setups:
These are average during the EU and US sessions, but exceptional during the Asian session.
6. Less market noise:
Market noise signifies small or large moves that are neither part of a trend or part of a ranging market or activity that makes no sense to any technical pattern or formation.
7. Less stress
8. Less competition
It is known that 95% of investors lose while 5% win. Why? This is because those that lose are where everybody else is. Hence, it is hard to make money in an over saturated environment.
It seems the best market hours for day trading is during the Asian session. The EU and US sessions are analogous to a turbulent ocean while the Asian period is like a calm lake. Trading is more predictable and less stressful then since there are no abrupt price movements nor is there significant market noise.
Great! So you can trade during the Asian session hours. What if you are not in this time zone? Then you either have to change your daily life schedule, sleep during the day and get up in the midnight to be at the computer during the Asian session market hours, or you have to migrate to the other side of the globe to become able to trade during the Asian session.
Also, if you like to trade a more volatile market or probably trade the NY or London sessions news, you will have to do the same if you don’t live in the proper time zone.
The question is whether day trading is the only way to make money through trading? If it was the only way, then it could make sense to do the something to be at the computer during that special market hours. But there are much easier ways to trade and make money. If you think you can make more money because there are more trading opportunities in day trading and following the short time frames, you are wrong. Taking more positions doesn’t equal more profit. Sometimes it causes more loss.
In spite of this, let’s say day traders and scalpers are right and they really make money. Do you really want to get up midnight or migrate to the time zone that covers your favorite market hours to sit at the computer for several hours per day and make some money? Do you really want to handle all these stress while there are much easier ways to make even more money through trading?
I am sure you choose the easier ways. You can make a lot more profit by spending only half an hour at the computer every day.