What is the best time of the day to trade?

The prices of assets vary throughout the trading day. They are determined by supply and demand. When demand outstrips supply, prices rise; when supply is greater than demand, prices go down.

This relationship varies constantly throughout the day, producing ever changing prices. None the less, we can make some pretty certain predictions regarding certain patterns.

One such pattern is that we can see price adjustments occur when the trading opens. For example, if an asset’s closing price was very high the previous day, the next morning we might see a downwards adjustment. If the closing price was very low, we might see an upwards adjustment.

Another pattern is that the market can react to events that have occurred during the night when the market opens. For example, something might have occurred in markets in other time zones that will have an influence on its price.

This means that a good trader can predict the first, initial price movement of an asset when the market opens. You can use this knowledge to make the opening of the market your best time to trade.

Assets with different trading times

When it comes to time frames in which to do your trading, you have to keep time zones in mind. Assets are traded when the markets where they are listed are open for trading. When the markets are close, no trading occurs and prices do not move.

This means that if you trade in stocks or indices, you are limited to operating when the relevant stock exchanges are open.

Assets are traded in several different exchanges, in different markets around the world. They can be traded for longer periods each day.

Currencies are exchanged all day long, in markets all over the world. However, a currency like the euro will obviously move more when the big European markets are open, and the same is true for the US dollar and the US markets.

The lesson here is that the best time frame for trading a given asset during the day, depends on time zones. You need to adjust your trading time to your preferred asset’s most active time periods during the day.

This could mean trading during the night, or during the early hours of the morning depending on where you are based, and in which time zone the asset is traded.

Periods with high and low trading volume

Another thing to consider when it comes to choosing the best time frame to trade binary options is volume. Volume is defined as the amount of money an asset is being traded for at any given time.

During the opening hours of the New York stock exchange, where Coca-Cola is listed, Coca-Cola stocks worth millions are being traded all day long. The greater the movement of Coca-Cola stocks, the greater this asset’s volume is.

Volume is important because signals generated during periods of high volume are more reliable than signals generated during periods of low volume. Generally speaking, a trend that occurs with high volume is much more dependable than a trend you think you see during in periods of low volume.

Volume is influence by many different factors. One of them is related to time frame, and when you ought to do your trading.

Generally speaking, volume will be low towards the end of the trading day. Investors will be less eager to make trades just before the market closes. Many will want to close their positions with plenty of time to spare.

For this reason, binary traders – and trend-followers in particular – should be very cautious about trusting signals that are generated during the last hour or so of an exchange’s opening time.

You should always keep an eye on an asset’s volume when considering its price movements. This is even more important during the final stages of the trading day.

Binary options may also be used as a vehicle to trade the volatility of the underlying market with limited exposure whereas trading the outright market in volatile conditions can be quite risky.