When is the best time to trade on the stock markets?

If you have been trading online for a while then you have undoubtedly noticed that certain times can be more advantageous than others. In this article we will provide some information on the best times to trade according to the market opening times and we will also explain the importance of the type of strategy you plan to use.  

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When is the best time to trade on the stock markets?

Trading according to the market opening times:

Online trading is of course accessible all the time but the different European and international markets are not all open at the same time so it is necessary to carefully choose your trading times according to the opening times of the markets you are investing in.

When you decide to start trading on the stock markets it is above all important to know the three most popular geographical time zones which are the United States for the New York Stock Exchange, Europe for the Paris or London stock markets, and the Asian financial markets with the Tokyo or Sydney stock markets.

But apart from simply trading during the market opening hours it is also judicious to favour the times when several financial marketplaces are open at the same time as this tends to generate a higher volume of transactions and therefore a higher liquidity. We particularly note here the time zone between 8 a.m. and 10 a.m. in the morning when the European and Asian trading sessions are operative and in the afternoon between 2 p.m. and 6 p.m. when the European and American sessions are both underway.

 

How to choose the best time for trading?

Clearly, the time when these trades are completed is a highly influential factor regarding the performance that can be achieved. In fact, bad timing can totally ruin a trade, even one that follows a well prepared strategy, as it is essential here to take into account the flow as well as the season of the market.

The statistics of studies completed on this subject reveal that certain times of the day are more advantageous for the achievement of beneficial performance. This can be explained through a correlation in the behaviour of traders at specific times. We know for example that the majority of traders buy when the prices are low and sell when the prices are high. These types of operations are generally completed during the daily opening hours when the markets are particularly volatile. However this strategy is not necessarily the best adapted for market conditions as the volatility can often be strong. It is therefore best to complete these transactions when the market is less volatile.

Certain strategies implemented by experienced traders even consist of waiting for the closure of certain financial marketplaces at the time of a slowdown in the market transactions to avoid a very high volatility that could incur high risks.

 

The best time for trading on the stock markets depending on your strategy:

Of course, choosing the best time to invest also depends on your trading strategy. In fact you need to decide the best time to take position according to the type of asset you choose together with the opening times of the market where it or they are traded and the times of its highest volatility. Taking these factors into consideration is the only effective way to determine the best time for your investment.

The choice of your trading times is extremely important before you take position; it is in fact an integral part of your investor’s trading strategy. Therefore, if you cannot choose the time when you prefer to invest in the markets then it is recommended to choose from the assets that are available for trading at the time you are available.

Frequently Asked Questions

What are the opening hours of the major stock markets?

The London stock market is open from Monday to Friday from 9 a.m. to 6 p.m. The New York stock market is open every day apart from the weekend from 1 p.m. to 10 p.m. If you trade in Asian assets then the Tokyo stock market opens from Monday to Friday from midnight to 9 a.m. Finally, the Sydney stock market is open every working day from 10 p.m. to 7 a.m. It is important to remember these times if you wish to trade internationally.

Is it possible to trade when the stock markets are closed?

It is of course possible to speculate on the stock markets during the time when the financial marketplaces are closed. In this case your orders are recorded and will be executed at the reopening of the markets, generally during the initial hour of the next trading session. There are in fact specific strategies aimed at speculating before the opening or after the closure of a trading session but these require a certain advanced knowledge and are therefore generally used by experienced traders.

72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. This is an advert for trading CFDs on Plus500