What is the Best Time to Trade Stocks, Futures, and Other Assets? - Earn2Trade Blog (2024)

There is a time for everything — even more so when it comes to trading the markets. Knowing the best time to trade stocks, futures, options, and other instruments is crucial for a successful trading strategy.

Timing is a critical component when it comes to trading the markets. For the purpose of this article, timing refers to the period when a trader operates on the markets.

If you’ve been actively trading for some time, you may have noticed how the same strategy can produce different outcomes during different times of the day. You may have had a couple of profitable trades over the last hour, but apply the same approach an hour later, and it could end up being something totally different.

Unfortunately, there’s no one-size-fits-all solution regarding the best time to buy or sell securities. Each market operates in its own unique way, and the best time to trade stocks won’t necessarily be the best time to trade futures or other securities.

How Do You Know When To Trade?

Traders rely on short-term price movements to make a profit. During trading hours, some pockets of time might be more profitable than others — these are generally periods marked by high market volatility and trading volumes. For many traders of stocks, futures contracts, and index-based exchange-traded funds (ETFs), it makes sense to plan their trades around these hours to maximize efficiency. Such an approach can often be more efficient than buying and selling from the market’s open to close.

However, it is essential to keep in mind that even professional traders can lose money trading within the most ideal trading times. Financial markets are, by nature, quite unpredictable, so there’s always the possibility of the market turning against you.

Nevertheless, since knowing the optimal time to trade the markets may result in better outcomes, there’s certainly no harm in learning about it.

With that in mind, let’s go over the best times to trade in some of the most popular markets.

What Is The Best Time To Trade Stocks?

Generally speaking, the best times to trade stocks are the first two hours after the market opens and the last hour before it closes. For the U.S. stock market, this is from 9:30 AM to 11:30 AM and from 3:00 PM to 4:00 PM Easter Standard Time (EST). These periods typically have the highest trading activity, opening up the best market opportunities.

Trading When the Market Opens

Market volumes and prices tend to go wild during the market’s opening hours. The first two hours are when the market factors in all the events, updates, and news releases that have taken place since the closing bell from the previous trading day.

Essentially, this is when most traders are trading the news, which usually creates sharp price movements and forms mini-trends.

During this period, experienced traders can usually recognize emerging patterns and execute a couple of profitable trades. However, novice and less-skilled traders, on the other hand, risk suffering significant losses if they fail to navigate the volatility properly. That’s why beginner day traders are often advised not to trade during the first 15 minutes after the market opens.

Trading in the Middle of the Day

Many professional day traders tend to stop trading around 11:30 AM. This is when the initial price volatility and trade volume start to subside. During this period, trades typically take longer to execute, and market movements are smaller with less volume. Traders aren’t so active and are usually just waiting on any news or updates that could impact the market’s direction for the remainder of the day.

That being said, trading stocks in the middle of the day may be a great idea for new day traders. This period is calmer and more stable, so the action is slower, and the outcomes are generally more predictable.

Trading During the Last Hour

The final hour until the market closes brings a flurry of activity. This period is usually marked by an increase in volatility and volume again as traders look to close out their positions or get in on late price rallies based on the events of the day so far.

Much like the first two hours of the day, seasoned traders can capitalize on the opportunities that open during the last hour. Beginners, on the other hand, are usually more passive.

Can You Buy Stocks On The Weekend?

The short answer is yes, but with some limitations.

Generally speaking, you can’t buy stocks on either the NYSE or NASDAQ during weekends the way you do throughout traditional working hours. Both exchanges operate during regular business hours on weekdays and are therefore closed on weekends. However, you can engage in pre-market and after-hours trading on NASDAQ and NYSE.

You can also buy stocks through the so-called Electronic Communication Networks (ECNs) – digital systems that offer a secure way to automatically match buy and sell orders in the market without using a third party. ECNs are particularly useful for traders who want to buy or sell stocks in a stock market outside of their current geographical location or the traditional working hours.

What Is The Best Time To Trade Futures?

One of the many advantages of futures over stock trading is the ability to trade around the clock. The futures market is open nearly 24 hours a day during weekdays. It would be a full 24 hours, if not for the required one-hour period (5:00 PM – 6:00 PM EST), usually set aside for server maintenance and related updates.

In any case, with 23 trading hours available, futures trading provides traders across the globe an opportunity to buy and sell futures contracts and manage positions all day long.

However, like stock market trading, not all time frames open up comparable trading opportunities. To succeed, traders must be able to recognize the most opportunistic times and areas to trade, as well as what times to avoid.

Given the scale of the futures markets, finding the best times to enter and exit can be challenging. Much like other markets, the ideal times for advanced futures traders are during periods of higher liquidity and price volatility.

In liquid markets, active traders enjoy consistent order flow with more fluid price action. There is also higher, more steady participation, resulting in greater trade efficiency. On the other hand, volatility leads to robust price action, providing opportunities for more profitable trades. However, risks are also higher during such periods.

To better understand how to pick the best times to trade futures, let’s divide the typical trading day in U.S. markets into three primary components:

1. Premarket Hours

The period runs from 7:30 AM to 9:30 AM EST. Premarket hours are an important time for traders of index futures, such as the E-Mini S&P 500 and the E-mini Nasdaq 100 futures. Equities and index-based ETF traders can also benefit.

This is the period when market participation starts to pick up as traders and investors return from the overnight session armed with news and updates that might sway market direction.

One of the biggest drivers of volatility and liquidity during premarket hours are scheduled releases of market-driving publications like the official U.S. economic reports, which come out at 8:30 AM EST. These publications include updates and news on critical economic data, including the Gross Domestic Product (GDP) and the Consumer Price Index (CPI), among others.

These reports can significantly impact price action, which experienced traders will likely capitalize on.

2. Wall Street Open

The first hour after the opening bell (9:30 AM – 10:30 AM EST) can also be a great time to trade futures because it typically includes heavy trading volumes and high volatility.

The next hour (10:30 – 11:30) can also offer potentially-fruitful trading pockets of time, but it would depend on the specifics of your current trading strategy.

3. Wall Street Close

The final hour before the closing bell (3:00 PM – 4:00 PM EST) is key for futures traders as price action tends to pick up again. Day traders are looking to liquidate open positions as overnight traders across the globe enter the market.

This leads to increased volatility and improved market depth, which traders can take advantage of to make some good profits.

Trading Hours

While the above trading day anatomy can be generally applied to futures trading, it’s essential to keep in mind that different futures contracts might have different trading hour specifics. They are usually determined by their respective exchanges, so the opening and closing times aren’t universal.

For example, take a look at some of the futures contracts traded on the Chicago Mercantile Exchange (CME).

The trading hours for buying or selling metals futures contracts differ from those for trading grains, for example. These time differences can make finding the best time to trade futures even more challenging.

Bear in mind that this is just one exchange. There may also be differences in trading hours among other exchanges — Intercontinental Exchange (ICE), Minneapolis Grain Exchange (MGEX), The Small Exchange (SMFE), etc.

CME Holidays

CME Group adheres to the official holidays recognized by the U.S. federal government, like New Year’s Eve, Christmas, Thanksgiving, Independence Day, Labor Day, Memorial Day, President’s Day, and Juneteenth.

Trading hours are impacted on these holidays. Some markets may be open for a limited time while others remain closed. The CME Group usually finalizes the trading hours for an approaching holiday about two weeks prior.

To be prepared, keep track of the CME Trading Days and Holidays Schedule or follow our regular weekly The Week Ahead updates on our Twitter, Facebook, and Instagram profiles.

Factoring in Your Personal Schedule

Now that you have a better idea of when to trade stocks and how trading times can impact your success as a trader, it’s time to craft your personal strategy. A paramount thing to consider is your own personal schedule and trading preferences.

It can be challenging to fit all these tips about timing and trading hours into a cohesive strategy, but it is imperative to account for your daily schedule. For example, if you’re a late riser, planning a trading strategy around premarket hours doesn’t make sense.

Conclusion

At the end of the day, remember that while historical trends can give insight into what markets might do regularly, they’re never guaranteed. Since day trading isn’t for everyone, we advise you first to give it a go in a demo account or pass an educational course before trading real money. In the end, there aren’t better ways to figure out what trading strategy and times will work the best for you.