Second part of our series on trading sessions and the best times to trade
In part one we went over the three main trading sessions, how they overlap and where more volatility can be expected. Here we’ll pick up things with the trading sessions for commodities and their specifics and continue with a detailed picture of the differences between the days of the working week.
As commodities are traded on different exchanges than stocks, like the LME and NYMEX they also have different trading hours. Gold and oil are the main attractions here, but they have some discerning features between them. Gold isn’t traded with futures, its price is more akin to that of currencies in the sense that it’s main trading volume is electronic and doesn’t necessarily involve any physical exchange of nuggets, jewellery or bars. So for gold you have markets that are open between 11pm GMT and 10:15pm GMT in the Trading 212 PRO platform.
For oil, the main energy source of the world economy, futures are the predominant way of trading. As the extraction, refinement and delivery need to be done before the actual consumption, real buyers and speculators have adopted this style of trading. There are two main types of oil contracts – Oil Brent and the more general one simply named “Oil” in our platform.
Brent Crude (or Oil Brent as it’s denoted in the platform) is comprised of oil types that come from the North Sea and is the benchmark for around two thirds of global oil trade. It can be traded between 1am GMT until 11pm GMT. The second contract is called “Oil’ and covers oil that comes mainly from the Gulf of Mexico. It’s traded between 11pm GMT and 10:15pm GMT.
You’ll also notice that the two have different expiry dates, so keep that in mind when trading. The trading hours for all instruments can be found on our main page in the “Trading Conditions” menu and in the “Trading Instruments” tab.
Switching to forex trading, especially if you trade on multiple currencies, has a specific rhythm that can be seen in the different days of the week. Mondays traditionally see the lowest volatility and price change, whereas Thursdays see the most action.
Here is a list of what currencies have their largest moves in the respective workday:
Thursday: EUR/USD, USD/JPY, AUD/USD, NZD/USD, EUR/JPY, GBP/JPY and EUR/CHF
Friday: GBP/USD, USD/CAD, EUR/GBP
The explanation for this is that, although the first day of the week is usually hectic for most businesses in the real economy, financial markets act on news that has just happened, or that has accumulated in some way. With two days of inaction and a lengthy Friday afternoon and evening to digest all previous announcements, usually Monday is quite calm.
Thursdays on the other hand have a concentration of planned economic announcements and this is why they have the most movement. Unemployment, payrolls and inflation numbers are key indicators for any economy and for the U.S. they are announced on Wednesdays and Thursdays You might wonder why they have such a wide impact, even beyond the actual “reach” of U.S. companies and government?
The answer has two components – the first is that the dollar is the most popular currency in the world, both in commercial trading and as a reserve currency by central banks. The second is that the U.S. economy is the most connected. Sitting between Europe and Asia, the resource rich Canada and the dynamic economy of Mexico, it’s safe to say that they are at the crossroads of the main economic highways. For now.
Numbers from Japan, Germany, Britain, Australia and most recently China can on occasion have the same impact, but it’s less frequent and they would have to be considerably different from estimates and expectations.
In part three tomorrow, which will be online at 4:00pm GMT, we will round off when trading action happens with a breakdown of volatility for each instrument type – currencies, stocks, indices and commodities.