Traders generally have the opportunity to select from a variety of option contracts such as stocks, commodity futures and currencies. This makes it necessary for traders to have some understanding of the trading hours involved with the particular financial assets they decide to trade.
The Foreign Exchange Currency Market (FOREX) operates 24 hours per day for four and a half days per week. There are more trading hours for this market than any of the other financial market. The FOREX trading day is divided into four trading sessions based on the world’s major financial centers located in Sydney, Tokyo, London and New York. For someone living in the Eastern Time Zone, the New York trading session begins at 8 A.M. and concludes at 4 P.M. This does not mean that a trader based in the Eastern Time Zone can only trade at those times. The interesting thing about the New York session is that the first four hours overlap the last four hours of the London session. This is when trading volume is highest and gives the highest probability that price volatility will be enough to offer the most trading opportunities.
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The U.S. stock market trading hours are 8:30 A.M. to 4 P.M. EST. There is some trading outside these hours, but the best chance for price swings and movement will occur within these times. It is not uncommon to see price activity fall to very low levels from 12 P.M. to 1 P.M. EDT when traders break for lunch. The time period between the morning start and lunch time typically has the most price activity.
A binary option based on the DJIA and NYSE stock indices or commodity futures will be determined by the stock market hours just mentioned. Some commodities do have even shorter trading hours. It will be necessary to become familiar with these hours on a case-by-case basis for these commodities.
Becoming familiar with trading hours for binary options if facilitated by options trading platforms that will not, for example, offer an option of four hours duration if the expiration time will extend beyond the trading hours of any given instrument, but it is still beneficial to understand trading hours in terms of determine what to trade, when to trade it, and perhaps most importantly, in order to devise an effective trading strategy.