Time is money. Timing is also really crucial in trading, both in terms of the moment of entering and exiting a position and the time of day when the transaction is opened. The recent survey by FOREX.com sheds light on when traders prefer to make their moves. It uncovers patterns in trading preferences across various asset classes and experience levels, showing that traders are most likely to choose the first or last hour of the trading day.
What Time Is Best to Trade
According to the survey, 35% of traders prefer the first hour of the trading day for executing trades. This is closely followed by 30% who favor the last hour. The least popular time is after lunch but before the last hour, with only 16% of traders opting for this period.
In the Asia and Pacific (APAC) region, 37% of traders prefer the first hour, while 34% opt for the last hour of the trading day in Europe. North America shows a balanced preference, with 34% favoring the first hour and 32% the last hour.
Long-term traders, who hold positions for weeks to months, are more inclined to trade during the first hour, aligning with the global trend. In contrast, traders with five to ten years of experience prefer the last hour.
What's the best time of the day to trade?
— Bitfinex (@bitfinex) August 23, 2022
☀️ 🍽 🌃
Forex traders stand out for their strong inclination towards the first hour, with 38% preferring this time for most of their trades. In the case of other asset classes, the results are more balanced. However, the survey shows a general trend that, regardless of experience, type of assets, and region, traders prefer to trade at the beginning and end of the day, with the least activity during its course.
“Aside from the daily timing patterns, traders should also consider seasonal trends. For example, the holiday season might see reduced trading volumes and increased market volatility, presenting unique opportunities for risk-aware traders,” Michael Boutros, the Senior Technical Strategist at FOREX.com, commented. “Additionally, geopolitical events and economic indicators can create fluctuations in global markets, demanding cautious and strategic decision-making.”
This type of data can be extremely important for brokers and FX/CFD service providers. By knowing the hours during which their clients trade most frequently, they can send them notifications about interesting trading opportunities, thereby increasing overall trading activity and retention.
The best and highest probability times to trade forex are...
— Trader Mike (@tradermike1234) May 9, 2023
2-5 AM EST (London killzone)
7-10 AM EST (New York Killzone)
All the opportunities you will ever need will occur during these times
You dont gotta be trading all the fuckin time
Focus
These results are based on a survey conducted by FOREX.com, which surveyed 3,000 traders globally between 3-10 July 2023.
A separate study prepared by Capital.com in June showed that time also matters for the profitability of transactions in terms of their duration. Capital.com revealed that holding different types of assets for longer periods could lead to increased earnings. The research found a significant correlation between the length of time a trading position is held open and the likelihood of making a profit.
Specifically, traders who kept their positions open from 30 minutes to six hours had a higher chance of making a profit, with an average rate of 44%. Additionally, these traders were more likely to use stop-loss mechanisms.
Traders Want Extended Session Hours
Although the FX market is available 24 hours a day, the ability to trade in the stock market is limited to the duration of the session. However, an increasing number of companies offering trading to retailers want to change this, expanding day trading opportunities with new instruments.
Last month, Interactive Brokers broadened its after-hours trading options to encompass 10,000 US-listed stocks and ETFs. This move allows clients to trade nearly round-the-clock, five days a week.
Similarly, eToro extended its daily trading hours by three additional hours for a unique set of CFD stocks in July. The company stated that the extra time would enable clients to respond to events that occur outside regular trading hours, such as earning announcements or major economic news.
Aiming to cater to a rising demographic of young time-flexible investors, Robinhood also offered 24/5 trading for individual stocks in the US. The well-known trading platform launched its Robinhood 24 Hour Market service in May, which, after a testing phase, is now accessible to all its users.
“Diversification remains a cornerstone of successful trading. By spreading investments across various asset classes and geographies, traders can mitigate risks associated with market fluctuations. It also provides the flexibility to adapt to different time zones and take advantage of favorable trading hours in diverse regions," Boutros added.
Spectrum Markets' H1 2023 report further disclosed that 35.3% of individual trades took place outside standard trading hours. The company highlighted that traders were most active in indices, making up 79.2% of the activity. The leading instruments in this category were the DAX 40, accounting for 25.3%, followed by the S&P 500 at 20.8%, and the NASDAQ 100 at 18.8%.
