While it is true that there is more liquidity due to volume during normal session hours 9: Today, with electronic trading and overnight desks at brokerage firms, this is highly unlikely. For many, early morning trading is preferable—say, starting at 4 a. For some, the less-volatile markets and relative calmness provide a clearer picture of direction. Asia has either finished trading or very soon will have finished and Europe is just starting to trade.

And the negatives of off-hour trading can be turned to positives. For instance, the largest concern is lack of liquidity, which can cause an unusually large market move. Traders can wait for this and when there appears to be no fundamental or technical justification for this, a trade can take the other side on a mini reversion to the mean play turning a lack of liquidity into an advantage. This trade can be confirmed by looking at anomalies if correlated and negatively correlated markets.

A blue arrow indicates the beginning of upward pressure on price at that time. Given that crude is negatively correlated to the U. Dollar Index for confirmation.

Notice what happened to its value. It fell, indicated inverse correlation and confirming the move in crude oil. Note that the crude contract month shown here is October, while the front month for the U.

You also can see it at work in other currencies as well as Treasuries. The year T-bond futures contract ZB is another good market to explore for opportunities to trade in the early morning hours. Notice what happened at 4 a.

Making the case for early morning trading | Futures Magazine

EST in the bond market. The year bond futures contract rose in value as the U. Once again, these are reverse correlated assets. It usually appreciates anywhere from five to nine ticks at this hour. When related markets move in concert in this fashion, it creates more certainty that the move itself will persist. Assuming an accommodating position is supported by your other analysis, confirming moves should give you additional confidence in holding or adding additional contracts.

As stated, another reason to consider trading at this hour is less volatility. Indeed, the summer of had trading sessions during which the markets should have gone up based on traditional analysis of fundamental news breaking at the time ; however, the opposite happened. For example, on Friday, Sept.

The actual number of new jobs created came in at , vs. Because many fewer jobs were created than were anticipated, it could be viewed as a sign of weakness in the economy. Traditional analysis would suggest that this should apply downward pressure on the stock market. However, while the markets initially fell when this news broke, the Dow Jones Industrial Average ultimately closed higher by 67 points during the regular trading sessions.

Futures Fundamentals: Strategies

We can perform some post-move analysis to infer why. Perhaps the market felt that the weaker employment numbers would make it harder for the Federal Reserve to justify hiking interest rates; therefore, easy credit and the economic stimulus that comes with it will persist for longer. If the numbers had been on par with the positive expectations, perhaps they would have allowed the Fed to start tightening credit in an effort to head off inflation. This is the type of unpredictable behavior that is common during regular trading hours.

As traders, we can avoid this uncertainty by focusing our efforts on early morning hours when market relationships play out absent large institutional interests that can shift bias counter to our expectations. Nick Mastrandrea is the author of Market Tea Leaves. Market Tea Leaves is published daily, pre-market in the United States, and can be viewed at www.

Trading Strategies for Crude Futures | Finance - Zacks

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Making the case for early morning trading FROM ISSUE. Smooth moves As stated, another reason to consider trading at this hour is less volatility. Mild risk aversion seen in early trade. WTI crude stumbles into bear market; gold bounces. Countdown to interest rate lift-off. Entering and exiting trades.

What Are the High Volume Trading Hours for the Futures Markets? - Tradingsim

US Federal Reserve crude oil crude oil market Nick Mastrandrea 4 Tea Leaves 4. Related Articles Mild risk aversion seen in early trade WTI crude stumbles into bear market; gold bounces Morning Mash Daily Price Action: Previous Countdown to interest rate lift-off.

Next Price Action Trading: Related Terms US Federal Reserve crude oil crude oil market Nick Mastrandrea 4 Tea Leaves 4.