CFD Trading and ESG Investing
Contracts for Difference (CFDs) are complex financial instruments that allow traders to speculate on the performance of a wide range of markets such as currencies, stocks, and commodities without having to own the underlying assets. To be able to make timely and profitable trades, traders need to consider multiple factors such as market conditions, economic data releases, and geopolitical events. Equally important is the timing of the trades as certain market hours tend to exhibit higher volatility and liquidity levels. In this article, we will explore the best times to CFD trading.
London Session:
The London session runs between 07:00 GMT and 16:00 GMT and is considered the most important trading hours for CFDs. As London is the largest financial center in the world, it attracts the highest volumes of trading activity and liquidity. During this session, the volatility tends to be significantly higher, providing traders with ample trading opportunities. Most of the major currency pairs are traded during this session, making it ideal for forex traders.
New York Session:
The New York session is open between 12:00 GMT and 21:00 GMT and overlaps with the London session for four hours. During this period, the market tends to be highly liquid and volatile as traders from both sides of the Atlantic are actively trading. This session is critical for traders who specialize in trading US equities as the majority of the corporate announcements and market-moving events take place during this period.
Asian Session:
The Asian session begins at 22:00 GMT and ends at 07:00 GMT and typically covers the trading activity in the Pacific Rim nations such as Japan, Australia, and New Zealand. Due to the lower trading volumes and liquidity levels, this session tends to have lower volatility than the London and New York sessions.
Overlap Sessions:
The overlap sessions provide traders with some of the most active trading hours in the forex market. The first overlap occurs between the London and New York sessions, typically between 12:00 GMT and 16:00 GMT. During this period, traders can capitalize on the high level of liquidity and volatility as the two financial centers actively trade. The second overlap is between the Asian and London sessions, typically between 02:00 GMT and 06:00 GMT.
Weekends:
cfd trading markets tend to be closed during the weekends. However, some brokers offer weekend trading for selected assets such as cryptocurrencies or Islamic accounts. Although the liquidity levels are significantly lower during the weekends, this can be advantageous for traders who have identified significant market developments during the news cycles but were unable to act on them due to the market being closed.
Conclusion:
In conclusion, the timing of trades in the CFD market is crucial for successful trading. Traders need to consider market dynamics, market hours, economic data releases, and geopolitical events to determine the best time to trade. By focusing on the London and New York sessions and the overlap sessions, traders can capitalize on the high level of liquidity and volatility. Understanding the optimal trading hours will not only lead to profitable trades but also help traders manage their risk levels effectively.