Can I do trading any time?

Seeing as the global 金融市場 generally operate 24 hours a day, five days a week; the simple answer to the title question is, you can pretty much trade any time within that 5 day window.

However, there is nuance to consider. While the markets are active 24/5, certain sessions offer the potential for more profitable opportunities, making during those times more popular.

But before we jump into the specifics, let us first consider what those sessions are, i.e., when do they open, when do they close, and where they are.

Understanding the trading sessions

• The market is divided into 4 primary sessions; the Sydney session, the Tokyo session, the London session, and the New York session.
• Trading kicks off with the Sydney session which is active from 7:00 am – 4:00 pm local time (9:00 pm – 6:00 am UTC).
• The Tokyo session follows, operating from 9:00 am – 6:00 pm local time. (12:00 am – 9:00 am UTC).
• London subsequently opens at 8:00 am local time, and closes at 5:00 pm. (7:00 am – 4:00 pm UTC).
• Finally, the last session of the day, New York, begins at 8:00 am and shuts at 5:00 pm. (1:00 pm – 10:00 pm UTC).

In theory, a trader is able to enter and exit positions at any time during those hours. However, the choice of when to trade during those sessions is largely dependent on the strategy that a trader decides to adopt. This is because not all trading times are created equal. Here’s why:

1. The overlap between the Sydney and Tokyo sessions are characterised by relative volatility, and influenced by news and events from the Asia/Pacific region. This window generally appeals to traders who are focused on currency pairs involving the Japanese yen, Australian dollar, and the New Zealand dollar.
2. The brief overlap between London and Tokyo sessions creates a surge in market volatility, especially for currency pairs like the yen and euro. This period is optimal for traders seeking trading opportunities driven by news from both Europe and Asia.
3. The overlap of the London and New York sessions is widely regarded as the most crucial period. With peak trading volume, volatility, and liquidity, this period is great for traders looking for significant price movements and multiple opportunities to maximise potential profit on trades.

Trading strategies

Some of the most popular strategies include:

Day trading

Day traders typically open and close positions frequently throughout a trading day. The usually exit those positions before the trading day ends. Positions are held for minutes to hours, and taking into account the fast-paced nature of this strategy, quick decision making is vital. These decisions are based on some form of technical analysis and when the occasion arises, news events. The risk inherent is high so ensuring risk management techniques are implement are a necessity.

Scalping

Scalpers, like day traders, will execute multiple trades within a trading day in an attempt to profit from tiny price movements. Positions are held for seconds to minutes. Trade volume is significantly high, making swift execution the norm. Scalping is considered highly risky because of the speed at which trades are opened and closed so risk management is vital. The approach generally excels in high-volatility conditions, particularly during the overlap of the London and New York sessions. During this session, traders attempt to maximise profits on quick price fluctuations.

Swing trading

Unlike day traders or scalpers, swing traders hold onto their positions for several days to weeks. They use technical analysis and sometimes 基本面分析 to come to trading decisions. Is considered moderately risky because positions are held open overnight, exposing traders to overnight risk and weekend gaps. This strategy may be well-suited for sessions with moderate volatility, like the Tokyo or Sydney sessions, during which prices are said to move in more predictable patterns. This enables easier speculation of entry and exit points.

News trading

This strategy is centered on the publication of key economic data, company announcements, geopolitical developments, and so on. The overlap sessions, notably the London-New York session, are considered suitable for this technique due to the huge volume of news releases from Europe and the United States at this time. Traders might expect sharp market swings in response to news announcements and position themselves accordingly.

趋势追踪

This strategy sees traders analysing/identifying the direction of trends for financial instruments, be this upward or downward. Positions may be held for days to months. Some of the most common technical indicators used by trend traders include moving average, MACD, RSI, exponential moving average, Bollinger Bands, and others.

Choosing your strategy

A range of trading strategies exist and picking one primarily has to do with your level of expertise, budget, tolerance for risk, and how much time you have available in the day to execute them.  Let’s explore this a little more.

• Define your goals to establish whether you’re looking for short-term gains or long-term growth. This will also dictate the trading sessions that are best suited to achieving these goals, and thus the strategy to pick.
• Consider how much time you have to commit to it. Day trading and scalping for instance will require a significant number of hours per day. Swing trading may need less of your time. Analyse your daily routine and establish whether the hours you have available to trade align with the hours your intended session is active. 
• Ensure you have a proper understanding of each trading strategy, including the risks that they impose. Remember, you’re likely to have a specific tolerance for risk so ensure you pick a strategy that is best suited to that level of risk. Consequently, this will also dictate the session you’re most likely to trade in, seeing as they differ in terms of volatility, liquidity and market behaviour.
• Establish to what degree you have learned the fundamentals of trading. Ongoing learning is a key component which means acquiring knowledge and information is a continuous process, one that should be integrated into your overall trading plan and strategy. This includes consuming resources like blogs, books, e-guides, videos, podcasts, seminars, webinars, etc. Also consider siging up for a demo account to gain practical trading experience. Use the demo account to experiment with opening and closing positions, and analyse outcomes. Take your time to learn how to use technical analysis to make more informed decisions.  

In summary, while trading at any time is possible, the key to optimal trading is aligning your trading strategy with the best times to trade in the different sessions. Further, the trader also needs to ensure that the strategy is feasible based on their available budget, time commitment, and experience level. Understanding these factors can help prevent costly mistakes and boost the likelihood of long-term success in the markets.  

Trading with IronFX

Register with IronFX and gain access to a top-tier, flexible trading experience, more than 500 tradable instruments, multiple account types, and fast execution. Through this broker, you’ll also be able to enjoy seamless withdrawals and deposits, and market access via the MetaTrader 4 (MT4) trading platform, arguably one of the world’s most popular trading systems amongst global traders. The IronFX Academy also offers an abundant source of educational resources to boost one’s skills and acquire fundamental trading insights.

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