Normal trading times at the New York Stock Exchange (NYSE) are 9:30 a.m. to 4:00 p.m.EST. At first, trading outside this time was limited to some stocks, some ETFs, etc. But since trading went global and developed global networks, exchanges began to offer extended hours to traders. Now small investors can trade “after hours,” outside 9:30 to 4:00pm, no matter where in the world the trader live .
Nite hours investing can be very lucrative for trading futures. During off hours, there are quite a number of contracts that are highly volatile. These include energies and currencies. Crude oil, as an example, trades internationally. Good trading times for crude are 3:00am to 8:00am EST. This is when Europeans are most likely to trade crude futures contracts.
Another very popular off hours futures contract is for Currency trading. Trading the US Dollar vs the Australian Dollar for example, the 6A futures contract. The 6A contract is most volatile from 7:00pm to 2:00am EST. The Australian traders are wide awake while the US traders are asleep. Here’s another example of off hours trading…the Euro, 6E. The Euro trades hot and heavy from 2:00am to 7:00am EST because the French/Germans/British traders are awake and trading actively.
Before you make the decision to begin night trading, make sure you have read all the rules, the differences between normal and extended hours trading. You should consult your broker. Ask them to give you all the disclosures pertaining to off hours trading. Understand, commissions and margins vary significantly between brokerages for after hours trading. Moreover, not all futures brokers can offer off hours investors futures trading action. Many brokerages close down their trading desk at 4:15pm EST when the futures trading day is over.
While nite trading offers many investing opportunities and you may have to change your style of trading to handle the off hours Market conditions. As an example, there is less liquidity after hours. Liquidity equals your ability to enter and exit futures trades. There are fewer traders off hours. Liquidity depends on traders trading. With fewer traders trading, it is not as easy to complete a trade. During normal trading hours, futures buyers and sellers are in abundance. After hours, there are fewer traders and reduced volume.
Finding a trading strategy that works well in a flat market is tough with reduced volume. But Shadowtraders.com developed a strategy designed just for this market, and they nicknamed it the “Dog Park” strategy. The Dog Park strategy relies on a flat market to be profitable. This is an easy strategy to put on and can be very profitable as long as the market remains flat.
One thing you might consider since you will be nite trading…price fluctuations tend to be greater. Because there are fewer traders, if someone trades with 500 contracts, the impact on that futures contract could be more than during regular trading when there is such a significant number of contracts being processed, 500 contracts is not even noticed. The impact on futures price fluctuations of news stories released at night may have greater. Because of this, trade with limit orders (where you must enter a price at which you want your order executed) not market orders (where you trade at the current price). If the price jumps because of someone trading with 500 contracts, you won’t have to give up 2 or more ticks to enter. You’ll need to be a bit more careful because you’ll be trading against professional traders who may trade with large size, of course, depending upon the contract you are trading. Professional traders can have more access to information than smaller investors. That is really true for news trades that occurring outside of normal trading hours.
Once you become familiar with trading off hours, you’ll find yourself waking up in the middle of the night to trade. This is an especially good trading time for those who are insomniacs or have cats that need to be let out in the middle of the night. To get a feel for nite trading, contact Shadowtraders. They specialize in off hours trading.
Barbara Cohen has been a professional day trader for over 10 years. She has trained hundreds of day traders to trade the Futures Market with Shadowtraders trading strategies. As the CIO, Barbara moderates Shadowtraders daily online trading chatroom. Before you purchase any trading systems, make sure you attend Shadowtraders Monday Night Webinar, and hosted by Barbara Cohen