How Do Trading Market Hours Work In Binary Options Trading?
However, the major caveat is that not all assets will be available to trade all the time, any time. Financial markets across the world open and close at different times and this means that some assets will be available to trade in some markets at certain times and be unavailable at other times.
One of the main advantages of binary options trading is that it is electronic and is not too limited in terms of the number of trading hours compared to physical trading platforms such as the New York Stock Exchange or the Nasdaq. Even then, there are suitable times to trade binary options.
Global Time Zones
The global financial markets are divided into three time zones—U.S., European and Asian time zones. The Asian markets open first, followed by the financial markets in Europe and then trading ends with the closing of the U.S. market. The main financial centers are New York, London, Sydney and Tokyo. Hamburg is also an option offered by some brokers.
Generally, markets open on Sunday 10:00 PM GMT and operate throughout to Friday 10:00 PM GMT. For traders in New York, the day trade begins at 5.00 PM local time and closes at 5.00 PM the following day.
The Best Time to Trade Binary Options
The market for binary options is usually at its peaks when the New York, London and Asian market are all open at the same time. When these markets are simultaneously open, there is a high volume of assets to be traded.
Volatility is key to making the most of your binary options investment. When more than one financial market is open, the level of volatility is typically high. Volatility is what causes prices to move in an upward or downward direction. When few markets are open and the volume is low, the price movement is lower and the markets are typically choppy.
Over the years, traders have come to determine that the most active trading hours are when the European market is open.
There is also a noticeable increase in volatility and price movement on Wednesdays and Tuesdays. Friday also tends to see high volatility mostly when the U.S. and European trading hours overlap.
In the U.S., high volatility and price actions usually starts to peak at about 8:30am EST. It is at this time when major economic data is released, which triggers volatility needed to move an asset in a certain price direction within a specific period.
The first Friday of each month is the most volatile because this is when non-farm payrolls are released in the U.S.
What about other trading zones?
U.S. trading hours do not restrict traders in Eastern Time zone. The first four hours in the Eastern Time zone (Asia) overlap with the last trading hours of the London market. This means there is still a large trading volume, high price volatility and therefore, many lucrative opportunities to trade binary options.
In conclusion, it is important to consult with your binary options broker to find out the most appropriate time to trade based on your asset of choice. Take into consideration factors such as holidays, the release of major economic data, and specific days of the week when executing binary options to boost your chances of profiting.
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