The Optimal Time For Trading Contracts For Difference (CFDs) Online
Contracts for Difference, or CFDs, have become increasingly popular over recent years due to their flexibility and accessibility. However, choosing when to trade can significantly impact your success in this market. This article will explore the best time to trade CFDS online based on various factors that influence these financial instruments’ price movements.
Understanding market volatility
Market volatility refers to the degree of fluctuation in asset prices within a specific period. Highly volatile markets offer more opportunities for profit but also come with increased risk since sharp price swings could lead to significant losses. Therefore, it is essential to understand how different times of day affect market volatility before deciding when to enter trades.
Best times according to geographical zones
The global nature of CFD trading means that multiple markets worldwide operate simultaneously. As such, identifying key sessions corresponding to major financial hubs can help pinpoint periods of heightened activity and liquidity. Here are some noteworthy examples:
London session (8 AM – 5 PM GMT) – Given its status as one of the largest forex centers globally, the London session often witnesses high liquidity levels and substantial price moves. During this timeframe, European stocks, indices, commodities, and currencies tend to exhibit considerable volatility.
US session (1 PM – 10 PM GMT) – New York hosts another financial center where many blue-chip companies and leading economic indicators reside. Consequently, the US session sees robust trading activities in equities, bonds, and currency pairs involving the U.S dollar.
Asian session (Midnight – 9 AM GMT) – Although less active than its Western counterparts, the Asian session still presents valuable chances for traders focusing on emerging economies like China, India, and Australia. Currency crosses including JPY, AUD, and NZD typically experience increased movement during this period.
Overlapping sessions
When two or more significant sessions overlap, there is usually an increase in overall volume and volatility. These instances provide ideal conditions for scalping strategies or short-term speculation due to rapid price changes. Notably, the following overlaps generate notable spikes in activity:
News releases
Economic data releases and geopolitical events frequently cause dramatic shifts in asset values. Traders should stay updated on upcoming announcements related to central banks’ monetary policies, employment rates, inflation figures, etc., particularly if they directly impact the underlying assets being traded. News events often trigger higher volatility, making them opportune moments for entering or exiting positions.