Those who are trading binary options for the very first time will find that a good amount of basic information must be processed in order to get off to a great start. Far too many traders decide to bypass this information, and jump right into strategies. Information such as peak trading hours should not be overlooked, as half the battle of generating substantial profits lies in knowing the best times to trade. While all assets have optimal trading times, currency pairs are special in that their price movement is directly linked to the operating hours of the Forex market.
The Forex market is open five days a week (Monday through Friday), 24-hours a day. The reason behind such long hours is the fact that banks and businesses are operational at different times worldwide, supplying liquidity to currency pairs. Each hour reveals different price behaviors in accordance with the specific marketplaces that are open. Understand what these hours and behaviors are and you’ll place yourself in the best possible position to capitalize on price movements.
Major markets are open for trading at different times each day. Each open market directly influences the liquidity and level of volatility of specific currency pairs. The EUR/USD pair, for example, tends to experience the highest trade volume throughout the London and New York market sessions, particularly while in the overlap time period when both markets are open simultaneously. Another example would be the USD/JPY pair, which is usually most active when the Tokyo market first opens, and then again when the New York market opens several hours later.
As a general rule, liquidity increases whenever more than one market is open for trading. The pairs that will be most active at any given time will be those which are directly connected to the open market(s). Additional examples include the Canadian market, which is open for trading while the New York market is open. Similarly, the London market hours overlap with several other European markets. The German market opens for trading just one hour prior to London. However, volatility normally does not experience a noticeable boost until the London market opens.
Those significant trading sessions directly influence currency pair trade volume and price movement. If your binary options strategy is dependent on volatility, or you’re planning to trade along with price trends, pay attention to the hours where the overall volume is highest. Any spike in volume will indicate an ideal time to be trading, as the price at that time may offer higher highs or lower lows. When opting for Range or Boundary trades, which require lower volatility, enter into trades when more markets are closed or there are no overlaps taking place.
Typically, the hours between 8-17 GMT supply the greatest trend trading opportunities, with the hours between 13-17 GMT usually supplying the largest movements. Traders searching for decreased volatility for the aforementioned Range or Boundary trades are most likely to find it between the hours of 20-5 GMT. The USD/CHF pair is much like the EUR/USD pair when it comes to hourly volatility, but the USD/CHF pair experiences less overall daily movement and thus hourly volatility tends to be less. The NZD/USD has pairing is similar in volatility to the AUD/USD pairing. Expect both pairs to move approximately within the same range on a daily basis.
Understanding the fundamentals, including exactly what the market sessions and trading hours mean can help you to determine which strategies to employ and when exactly to use them. Regardless of which time frame you decide to trade within, it will help to have a guideline that pinpoints which markets are open. The ability to filter out bad trades and capitalize on good trades is one which all highly successful binary options traders much have.
We make it our mission to not recommend anything but the best – which, according to industry experts, is IQ Option, the top regulated broker for your country with a minimum deposit of ONLY $10!
Between 74-89 % of retail investor accounts lose money when trading CFDs