- Most futures markets worldwide are open 24 hours a day, five days a week, from Monday to Friday, with a one-hour break during the day.
- There are four key parts of each trading day in the futures market – Pre-market, opening, midday, and closing.
- The best time to trade futures depends on a trader’s trading style and strategy. Traders who prefer volatile market activity should focus on the opening and closing sessions, while traders who prefer less volatility should be more active during the midday trading session.
Success in trading futures is not just about finding the right strategy; it’s also about finding the perfect trading time of the day so it matches your personality and trading style.
This article will explore the optimal times to trade across various futures markets. You’ll discover when these markets are most active and when the futures markets are less volatile. You’ll also learn how to leverage peak trading periods to improve your strategies and avoid common pitfalls.
Table of Contents
Futures Markets Trading Hours
Before we start, let’s answer this critical question – What are the trading hours of the futures markets?
So, generally, most futures markets around the world are open 24 hours a day, five days a week, from Monday to Friday, with a short break of one hour, usually between 16:00 PM and 17:00 PM Central Time. The one-hour break is designated for server updates, managing open positions, and verifying compliance with maintenance margin requirements. This basically means that futures trading is available 23 hours a day for most futures products.
You should also note that futures trading hours vary depending on the exchange and the chosen asset. Remember that the futures market is not just one market. As a matter of fact, according to Wikipedia, there are 27 major exchanges worldwide and more than 100 small futures exchanges. So, every futures exchange has its own trading hours based on its domestic market. Not only that, different markets/assets have different trading hours.
However, it’s safe to say the vast majority of futures traders usually trade on the Chicago Mercantile Exchange, which is the largest options and futures exchange worldwide in terms of daily volume and the number of assets provided. As such, in this guide, we’ll focus on the US futures market.
US Futures Market – Key Trading Sessions
The futures market is open 23 hours a day; however, since it is highly correlated with the US working day as well as the US stock market, there are key sessions of the day every futures trader must be aware of.
US Pre-Market Trading Session: 8:00 AM-9:30 AM
The US pre-market hours are a crucial time for future traders as US participants enter the market, typically setting the market direction for the day. Often, the high volatility builds up in the pre-market session as US investors return to the market following the Asian and European sessions.
Additionally, US economic data such as the GDP, CPI, and the Non-Farm Payrolls are released at 8:30 AM, which normally can be a key factor in adding volatility to the markets and helping traders exploit trading opportunities.
US Market Opening Session: 9:30 AM-11:30 AM
Many futures traders consider the US opening session to be the best time of the day to capture significant price movements. This trading session is highly liquid since there’s an overlap with the European market. Around the closing hour of the European markets, there’s the highest level of trading volume in the day as Europen traders close their daily positions.
In short, there’s heavy trading volume and market volatility around this session, which can be ideal for scalping and short-term trading.
At the same time, take note that since prices fluctuate randomly following the first minutes of the opening session, it is highly recommended to be cautious and work with risk management tools such as stop loss and take profit.
Mid-Day Trading Session: 11:30 AM- 3:00 PM
The mid-day trading session is normally the ‘calm’ trading hours of the day. Around these hours, the markets tend to settle down, with lower volatility and volume.
Therefore, this part of the day can be ideal for ‘slow’ traders and those who prefer to collect small profits.
US Market Closing Session: 3:00 PM-4:00 PM
Like the opening session, the US market closing session is characterized by high trading volumes and volatility, making it an ideal time frame for those who thrive in volatile markets. During this session, day traders close their positions, scalpers exploit the high volatility with a large number of trades and high-frequency trading bots add liquidity to the futures market.
Here’s a quick illustration of key trading sessions in the e-Mini S&P 500 Futures market.
As you can see from the 30-minute e-Mini SP500 Futures chart in a span of two days, the key parts of a trading day are repetitive, and the formation of the trading volume looks almost the same every day.
The market starts with high trading volume during the opening hours, followed by the midday session, at which the volume decreases. Finally, the day ends with the closing session when traders close their daily positions.
When is the Best Time to Trade Futures?
Like many other trading preferences, this is subjective to one’s personality and trading style. From my experience, I‘ve seen traders that thrive in a volatile market while others (including myself) are looking for a calm or boring market condition.
Further, the best time to trade futures also depends on the specific market you are focusing on. For example, the Grains futures market is very sleepy during the Asian and European sessions and could be highly active when the US market opens. Other markets, on the other hand – like equity index futures, metals futures contracts, and commodity markets – are often active the entire day and have fewer swings in volatility and liquidity.
Having said that, we are here to answer questions and provide guidance to those who need it. So, what are the best times to trade futures?
For traders who are looking for volatility, the best trading hours in the futures market are around 9:00 AM to 10:30 AM EST and 15:00 to 16:00 PM EST. During these trading hours, there’s often high volatility, especially in the US futures market. Therefore, if you are a trader looking for volatility, then you better focus on these periods of the day. This is, in fact, not something unusual to trade during the opening and closing hours. For that matter, there are also different trading strategies, such as the Opening Range Breakout strategy, that are specifically designed to help traders become profitable by trading these specific hours of the day.
On the other hand, if you are running away from volatile markets, then go and grab a coffee during these trading hours. Many traders struggle with trading when the market is highly unpredictable. As such, they often look for calm and less volatile periods of the day to be able to put their strategy into action. If you feel that you are part of this group of traders, then you might want to focus your trading activity between 11:00 AM and 15:00 PM EST.
Add it all up:
- For traders who thrive in volatile markets, the best time to trade futures is during the opening session (9:30 AM-11:30 AM EST).
- For those who find it easier to make profits in calm markets, the best time of the day to trade futures is during the pre-market trading session (8:00 AM- 9:30 AM EST) and the mid-day trading session (11:30 AM- 3:00 PM EST).
Futures Vs. CFDs – Differences and Similarities, and Which is Better?
Another market that is open for 23 hours a day, five days a week, is the CFD market, which works very similar to the futures market.
CFDs and futures are both financial derivatives that enable traders to trade a wide range of financial assets, including commodities, shares, FX currency pairs, equity indices, interest rates, and digital assets.
However, there are differences and similarities between futures and CFDs, and each form of trading has its pros and cons. This leaves many traders with the question of which is better – futures or CFDs?
Let’s quickly explore the similarities between futures and CFDs:
Similarities
- Both are used by retail traders to speculate on the asset’s price without owning the underlying asset (although some futures contracts can often be physical or cash-settled contracts).
- Both CFDs and futures come with margin and leverage, which enable traders to open relatively large positions with little capital.
- With futures and CFDs, traders can easily go long and short, meaning they have the flexibility to predict if the price action is about to rise or fall.
- Both futures and CFDs provide traders with a wide range of markets and assets.
Despite the similarities, there are also key differences you must be aware of before making a decision on which instrument to choose.
Differences
- CFDs are simpler to trade – The futures market is far more complicated to learn than CFDs. You must get familiar with the different symbols, expiration dates of each contract, seasonality, trading costs, etc. Overnight costs – Another key difference between futures and CFDs is the cost of leaving an open position overnight. Holding a futures position overnight does not require any cost; however, you must take into account the high margin requirements from major future exchanges when holding an open position overnight. On the other hand, with CFDs, the financing costs for leaving a position overnight are quite high.
- Variety of assets – Generally, CFDs provide a wider range of assets and markets than futures. With a CFD trading account, traders get access to trading stocks, ETFs, and a wider selection of FX currency pairs. On the other hand, Futures trading offers traders the ability to trade spreads between different futures markets. This is a popular trading strategy among futures traders that utilize the commodity spread strategy or the currency futures spread strategy (for example. the spread between corn March and December contracts).
- Trade size – CFDs enable traders to trade with a lower position size than futures. For example, the minimum margin requirement for the mini crude oil futures contracts is around $500, while CFDs enable traders to trade at a much smaller position size, which could start from $10.
- Opening a futures trading account normally requires a much higher initial deposit and a long registration process than opening a CFD trading account.
- Futures generally involve lower trading costs compared to CFDs.
The Bottom Line
So, which is better – CFDs or futures?
Well, obviously, that depends on a trader’s objectives, trading goals, and trading strategies. It also depends on your budget and the time you have to learn a new market. In other words, there’s no market that is better than the other. Futures trading has several advantages over CFDs and vice versa.
Ultimately, both futures and CFDs can be viable options for trading in the markets. In general, futures trading is more suited for prop trading firms, retail traders with large investment capital, long-term traders, and those who need to hedge their positions.
On the other hand, CFDs are simple to trade and are, therefore, normally favored by retail traders who are looking for direct access to the markets without any complications.
So, if you are looking for a reliable CFD brokerage firm, you can visit SwitchMarkets – one of the most cost-effective brokers in the industry that offers a variety of nearly 2000 assets (including equity markets), top-notch trading platforms, and free trading tools.
Risk Disclosure: The information provided in this article is not intended to give financial advice, recommend investments, guarantee profits, or shield you from losses. Our content is only for informational purposes and to help you understand the risks and complexity of these markets by providing objective analysis. Before trading, carefully consider your experience, financial goals, and risk tolerance. Trading involves significant potential for financial loss and isn't suitable for everyone.
