For profitable trading it will be advisable to make trades at the moments of trading session when strong price movement is the most probable, and those periods when market is weak or is in sideways movement, exclude trading operations. After the first study of market tendencies one might think that it is almost impossible to determine in advance in which periods the market is more dynamic.
It is worth to mark out the times when important news and reports are released.
Take an economic calendar to determine the exact time of news releases.
My research was carried out, the main task was to identify the periods of trading session with higher volatility and to establish a direct relation between volatility and liquidity level in these periods.
The first and the last trading hours are more dynamic than the others as large players regularly place positions at the opening of the exchange, so we see more volume trading in this period.
The last hour, apart from the activity of the big participants, also intraday traders cover positions, lower margin in the trading session, allows them to trade more contracts, and many exit positions as after the main session margin will be much higher and they will not be able to cover the number of contracts that they trade during the day.
Overlap period – when trading hours overlap – there is more activity and volatility in the market. Mikhail Lemah
Professional traders use these overlapping periods, because during them the liquidity and trading volume on the market is high. Higher expectation of trades and often major trends of the day – all this magic starts when several exchanges work at the same time.
03:00 – 05:00
During this period the following are in operation
Australian, New Zealand, Tokyo, Singapore, Shanghai and Hong Kong stock exchanges.
With China’s booming economy – the Asian market is getting more and more attention.
10:00 – 14:00
Open at this time
London Stock Exchange, Zurich & Frankfurt, Hong Kong, Dubai, Shanghai, Mumbai, Singapore
From 09:00 a.m. European time – 10 major stock exchanges open
SGX Singapore, HKEX Hong-Kong, SSE Shanghai, NSE Mumbai, DFM Dubai, Tadawul Riyadh, FWB Frankfurt, MOEX Moscow, JSE Johannesburg, LSE London, SIX Zurich.
If you compare all three activity zones – this one is the second most volatile and liquid. It is worth adding this period of activity to your trading schedule, as quite often these periods set the major trend for the whole day.
There are many financial markets in Europe, but the most important ones are Frankfurt, Paris and London, with about 30% of the total financial markets.
16:00 – 19:35
London Stock Exchange, Zurich, Frankfurt, Russian Exchange, Chicago, Toronto, Sao Paulo, Nyse, Nasdaq, New York
End of European markets and start of American markets is the most volatile and liquid trading period.
Nine exchanges are operating at the same time during this period:
WB Frankfurt, MOEX Moscow, JSE Johannesburg, LSE London, SIX Zurich, BM&FBovespa – SAO Paulo, CHX Chicago, TSE Toronto, NYSE / Nasdaq/ New York.
US trading session is very volatile and aggressive with important economic reports. European and American trading sessions account for 70% of the total average trading volume.
“It is not a good idea to trade against the big players.”
Before you speculate on a financial instrument – study it in detail.
One of the key components of successful trading is the ability to act and trade correctly during different trading sessions . The specifics of trading in different trading sessions will allow a trader to use his time and resources effectively and efficiently.