The Best (and Worst) Times to Trade

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I know that options allow you to control a large amount of stock value with a small investment. Put and call options are some of the greatest trading vehicles ever created. But day-trading the options is not one of those strategies. Options are simply the wrong tool for that particular job, like trying to cut a board with a tape measure, drive a car to an island or cook a steak in a microwave.

Best time to day trade options first issue is that of trading liquidity and bid-ask spreads. For almost all options, the bid-ask spreads, as a percentage of their value, are much too wide for day trading purposes, although not a problem for longer duration trades. We enter and exit trades with precision timing as the price of the asset touches small-scale demand and supply zones.

This can be very effective and lucrative, but it requires quick trade entries and exits. When we buy an option, if we want to get it done that quickly we will have to pay the asking price for it. Later, when we sell it, we will have to accept the bid price. When we have the time to wait, we can avoid paying the full spread by using limit orders. In day trading there is no time for that. That alone pretty much rules out options as a day trading vehicle. Also, the thing that makes options unique is that there are best time to day trade options separate sets of forces acting upon their prices at all times.

These expectations can and do change from moment to moment. Best time to day trade options causes option prices to inflate or deflate, completely separately from the effect of stock price changes. Sometimes the effects best time to day trade options current stock movement on the one hand, and of the expectations of future stock movement on the other hand, both act to push option prices in the same direction.

But sometimes they act in opposition. Finally, there is the issue of time decay. This puts steady pressure on option prices both puts and callswhile not affecting the underlying stock at all. So, even the best analysis of probable stock price movement alone does not give us enough information to trade options effectively, most especially over very short time frames. We also need to assess market expectations.

Are those expectations too high, making options overpriced and therefore a good bet to sell short? Or too low, making the options an especially good buy?

Answering these questions is not especially difficult, and we have great tools to do just that. However, the effects take longer to play out than a few minutes or hours. We can make the three option forces into three separate profit centers when we use them correctly, as taught in our Professional Option Trader class.

Use the right tools for day trading, and use the finely-tuned instrument of options in the environment where they can really sing. Options November 10, Day Trade Options? Disclaimer This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or best time to day trade options the buying, selling or holding of any financial instrument whatsoever.

Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader.

The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

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Welcome to our new series on binary options trading for beginners , where we will take you by the hand and show you a systematic way to trade binary options. Today we will touch on the best times to trade binary options. Some of these assets are traded on a hour basis: Stocks are not usually traded on a hour basis.

The trading hours of a stock market determine the times at which a stock listed in that market is traded. When you take the time zones of the trading capitals of the world into consideration, this gives different trading hours for trading stocks on the binary options market.

The binary options market is one where traders make money based on predicting direction, and volatility is what gives price action direction in the market. Trading works best when the market is bubbling with activity from traders all over the world.

When there is good trader activity in the market, it generates the liquidity and volatility needed for the underlying asset to get to its target before the option expires.

Even though assets like currencies and commodities are supposed to be hour markets, there are only certain times of the day when the market activity is at its maximum. This is usually when we have an overlap of the trading zones of the world. Because not all assets have the same trading hours, we will discuss the various classes of assets as separate entities, taking into account their own peculiar trading hours.

As we mentioned earlier, stocks are usually traded for a maximum of 6 to 8 hours a day. As such, the US markets are used as the benchmark of checking the trading hours for stocks. US stock markets usually trade from 9. If you are trading stocks in the binary options market, pay attention to the times at which the stock markets in which they are listed are in operation.

The diagram below gives a perfect illustration of this. You also need to know that the local currencies of the active time zones will have increased volatility over others. Another way of studying the trading times would be to group the commodities under the exchanges where they are traded. As such, the agricultural commodities, which are traded in the Chicago Mercantile Exchange, are more actively traded from 9.

Once you master the trading hours for each asset, you are one step away from potential profitability in the market. The Best Times to Trade Binary Options Welcome to our new series on binary options trading for beginners , where we will take you by the hand and show you a systematic way to trade binary options. Timing for Stocks As we mentioned earlier, stocks are usually traded for a maximum of 6 to 8 hours a day.

Timing for Commodities Commodity markets are most active at the following times: CL — 9am EST to 2. Full information on trading hours is available on the CME Group website.