When it comes to trading, just like when developing any skill, you need a lot of practice in order to get good. So why limit yourself to stocks, which are only available to trade for a small part of the day, when futures are open almost around the clock?
The US stock market regular session goes from 9:30 am EST to 4:00 pm - that’s only 6 ½ hours – slightly more than a quarter of the day. With such a small time frame in which to trade you have fewer opportunities and it takes longer to get the experience needed to become an effective trader.
However, with futures, the markets are open virtually 24/7* during the week, allowing you to trade on your schedule, when it works best for you. Even on the weekend, or at least part of it.
What many people don’t realize is that futures begin trading at 6:00 pm EST on Sunday evening. This start time is a quirk related to the fact that the Globex electronic trading platform, on which futures trade, is owned by the Chicago Mercantile Exchange (CME). Contracts go live at 5:00 pm local time, which, as their name implies, means Chicago time, or Central Time, one hour ahead of New York.
So, with the exception of two brief maintenance breaks during the day, you can trade futures non-stop from Sunday evening to the close of the stock market Friday afternoon.
But even with round the clock hours, there are still certain timeframes outside of regular US stock market hours that are better than others to trade futures, when increased volume provide better liquidity. These timeframes all are related to the opening and closing times of the major foreign markets.
For example, the first increase in liquidity comes at 8:00 pm EST, which coincides with the opening of the Tokyo stock market, and lasts until its close at 2:00am EST. There is then a one hour lull, when liquidity dries up a bit. That ends when the London stock exchange opens at 3:00 am EST and volume continues to increase right into the US open.
This schedule makes it very easy for those who want to learn about, or get better at trading, to do so when it works best for them. And even though there may be times during the course of a day when you can’t devote all your attention to the market, that doesn't mean you can't monitor it.
Technology now enables futures traders to track their positions and account P&L not only from desktop computers, but from mobile devices as well. This means that trades which were put on during the day, after hours, or even overnight can be managed in real-time during the day no matter what you are doing.
Even if you are not looking at your phone, alerts and stop orders can be set up and configured so that you can manage your risk parameters and never be outside of your comfort zone when your positions are live.
Though at first it may seem odd to be able to trade both when the stock market is open and when its closed, for those that want to get more experience in the markets and take advantage of round the clock opportunities, futures trading is a great way to do it.
*"Full trading hours can be found on each exchange's website. The trading hours for the E-Mini S&P 500 can be found here http://www.cmegroup.com/trading/equity-index/us-index/e-mini-sandp500_contract_specifications.html
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How Can New Traders Ease Into Futures