Best Time to Trade Binary Options: Why and When Good Timing Matters
One of the biggest advantages of binary options trading is the flexibility that it offers to traders, as you’ll have access to a wide range of financial markets and instruments 24 hours a day.
However, to maximize the potential profits, skilled traders must understand the importance of timing, and how certain trading windows can be used to their benefit.
With that in mind, there are two main trading windows used by the majority of binary options traders worldwide, and those align between 6.00-12.00 GMT and 18.00-0.00 GMT, as during those hours there is an uptick in market activity and liquidity, leading to higher profit potential due to the peak trading volume level.
In addition to the impact of trading sessions, there are also more important factors to consider, based on the asset class you trade with, as well as market volatility and weekend trading, all of which we will explain in more detail below.
Global Trading Sessions and Their Impact
As we noted earlier, the best trading hours for binary options are most commonly those during which the world’s largest exchanges are the busiest, and especially in periods in which these sessions overlap.
There are four main global sessions that you need to be aware of if you want to strategize and maximize your profit potential, and those are the Pacific, Asian, European and American sessions. Each of the sessions has its unique characteristics, and suits certain types of traders and assets better.
The Pacific Session (22.00 GMT to 7.00 GMT) is usually the quietest of the three, but if you are focused on trading in AUD/USD and NZD/USD or some other popular Asian-Pacific currency pairs, this is the time frame where you’ll have the greatest potential for profit.
The Asian Session (23.00 GMT to 8.00 GMT) is where trading in currency pairs involving currencies from Japan, Singapore and Hong Kong will heat up the most.
The European Session (7:00 GMT to 16:00 GMT) is set to start before the Asian Session ends, and as the London exchange opens, the market volatility rises sharpy, with the main currency pairs being traded the most are typically EUR/USD, GBP/USD, USD/CHF and USD/JPY.
The American Session (13.00 GMT - 22.00 GMT) is the period of the maximum volatility and peak trading volume, especially in the time window where it overlaps with the European Session (13.00 GMT -16.00 GMT), offering the highest potential in currency pairs involving the US Dollar, as well as in stocks and commodities.
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Optimal Trading Hours by Asset Class
The type of asset you want to trade with also has to be considered when looking for the right time to trade binary options. Here’s a quick overview of how you should approach each of the four main asset types in regards to the previously mentioned global sessions:
- Currencies: As we noted before, trading on the Forex market is at its peak in the window where the London and New York sessions overlap, giving you a 4-hour period with heightened volatility and liquidity for the world’s major currency pairs.
- Stocks: This asset type is simpler to trade on, as stocks have specific windows of activity, specifically 9:30-16:00 EST for US stocks, and 8:00-16:300 GMT for UK stocks, and these are the periods with the highest profit potential in the stock market each day.
- Commodities: Trading on commodities is a bit more complex, as each asset usually has a specific window aligned with market activities and geopolitical developments. As an example, oil and gas are traded between 9:30 and 15:00 EST, while precious metals can be traded 8:30-17:00 EST, and corn can be traded between 9.30 EST and 13.15 EST.
- Indices: The best times to trade binary options for indices like the Dow Jones or the S&P 500 mostly coincides with the starting hour of trading at the New York Stock Exchange, as the most profit potential is usually seen in that short time frame, between 9:30 ET and 10:30 ET.
Trading Binary Options on Weekends
While the majority of financial markets are closed during the weekends, binary options traders can still utilize these time periods, if you find a broker that supports weekend trading, of course.
Some binary options trading platforms will offer a better selection of assets compared to others, but you’ll generally find assets there that are available for trading 24/7, like OTC stocks, indices and currency pairs, as well as cryptocurrencies.
Trading on weekends is much less hectic and volatile, giving you the opportunity to test and develop your binary options trading strategies, to diversify and build your investment portfolio and to conduct a more detailed technical analysis until the markets open again on Monday morning.
I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.
