One of the big draw points of trading binary options is that the market is open around the clock. Somewhere in the world, something is being traded, and with binaries, you can profit off of it. This doesn’t necessarily mean that you need to, though. Rather, by focusing your efforts just on those moments when your asset is most likely to go through a big change, you can streamline your day and make just as much money–or more–by only trading a few hours each day. This is why knowing the peak volume hours of the market you are trading in is so important.
The 30 Minute Rule
If you have ever watched the volume measure at the end of a day on Wall Street, you are probably aware of the fact that at the beginning of the trading day and at the end, there are always big spikes in how much is going on. This happens regularly, and it happens mostly in the first 30 minutes and last 30 minutes of when the stock market is open. It lays the groundwork for the 30 minute rule, which states that the most profitable times to be in a position are during the first and last half hour of the market’s open trading hours.
Now, you need to know that this doesn’t just go for stocks. It extends to each marketplace, for each core type of asset. You can use this strategy with indices, commodities, and currencies, too. Indices make sense; they are just summaries of groups of stocks. But aren’t commodities and currencies internationally traded?
Yes, they are. But, they tend to only be traded at their heaviest when certain markets are open. Oil is traded heavier when New York and Middle Eastern markets are open. The Japanese yen is traded the most when Tokyo’s exchanges are open. European stocks and indices are at their heaviest when Germany’s DAX is open. And so on. The principle extends to these, too. During the first and last 30 minutes of when these markets are open is when their most popular assets move the quickest.
Using this strategy for binary options is superior because of the fact that binaries measure movement, and not change. You are not looking for a currency to move 1,000 pips in your direction, but rather to just move in your direction. You are trying to predict whether a price will go up or down, and not by how much. So, when you know that an asset is most likely to move, having the correct set of binary options in place to capture the profit off of it will be to your biggest benefit.
As with anything, there are always a few exceptions. The biggest that you will find with trading hours is the fact that many binary brokers restrict stock trading during the first 30 minutes of a trading day. It is unfortunate, but it can be worked around. For example, by this point in the day, you are able to grasp a clear direction of the tone that the stock or index has set and ride off of it for a few more minutes, especially if that tone is decisive and no news is upcoming that could change things. Also, you are not restricted during the last 30 minutes, and this is when prices will move even faster. In the morning, traders are going in with information from the night before, but at the end of the day, they are setting up for tomorrow. Take advantage of this, and you will see your profits go up while spending less time working on it.