Most traders obsess over entries, indicators, and setups, but often overlook a simple factor — the time of day that you trade.

Time of day affects volatility, liquidity, and when new information enters the market. 

Ignoring it can turn good setups into frustrating inactivity, or even losses, while embracing it can help you trade with the market, not just the setup.

Why Time of Day Is Important

Markets are not equally active during the whole period they are open. Price action is driven by human behaviour, either on an individual or organisational level. 

Behaviour commonly follows routines:

• Economic data is released at scheduled times
• Institutions trading during business hours
• Retail traders are more active during specific sessions —  in terms of volume and location.

This invariably creates rhythms in the market. By learning to trade with these rhythms, your trades will often require less confirmation, you improve stop placement, and have cleaner follow-through on trading ideas.

The Global Trading Clock

The trading day is broadly broken into three main sessions: Asia, Europe, and the US. Each has its own “character,” and benefits vary based on which time zone best aligns with your strategy.

1. Asia (Tokyo)

10pm –7am GMT: Markets are generally quieter except JPY and AUD FX pairs and index CFDs. 

Common characteristics include:

• Lower liquidity
• Range-bound behaviour
• Risk of false breakouts

Reversion strategies may do well in such market conditions as well as setting up highs and lows, which may be useful references for sessions later in the day.

2. Europe (London)

7am–4pm GMT: Increased volatility and volume are seen during the European session across many asset classes. The opening of the LME can influence metals prices, and US futures may respond accordingly to increased volatility. 

Common characteristics include:

• Large institutional flows
• Strong trends can begin
• Overlaps with NY for 2 hours 

Breakout strategies using Asian session highs or lows as reference (or previous days’ US session) may outperform. And trend continuation and reversal approaches on the back of new data coming out of Europe may also be common.  

The two-hour crossover with the subsequent US session can also be an important change in market conditions. 

3. US (New York)

12pm–9pm GMT: Volatility spikes may occur at US equity market open and significant data releases with global asset class impact are often released at 8.30am US Eastern time. 

Common characteristics include:

• Major economic releases
• US equity open creates short-term momentum
• Slower into the late session 

Fast moves might be prevalent early in the day, suggesting short-term momentum-supported new trend set-ups may outperform. Reversals around the middle of the day are also not uncommon.

The Federal Reserve interest rate decisions are always in the early afternoon in the US, which can flip market sentiment.  

The Intra-Session Rhythm

It is not only session-to-session changes that can often be seen on price charts. Within each session, price often has a tendency to move in waves. So, as a general rule, you may see:

• Early session: bursts of volatility and institutional positioning
• Mid-session: consolidation or retracements
• Late session: thinning liquidity, profit-taking, fakeouts

Why Most Traders Miss This

During strategy development, many strategies are tested on charts without considering what time the setup occurred.

A 15-minute candle during the London open isn’t the same as one during the Australian lunch break.

So, if you start taking breakouts in low-volume periods, trading reversals just before news, or entering trends during midday doldrums, these may have less chance of meeting the goals for that particular trade.

How to Use Time of Day as a Filter Practically

1. Mark Your Session Windows

On your chart, visually block out the London open, NY open, and overlap. Use vertical lines or shading — this will help you historically see what happens at these key times.

*Note: We are developing a free indicator for this that you can place on a chart. Email [email protected] if you are interested.

2. Backtest by Session

You can split potential trades by session ‘time blocks’ that look back over time. Strategy types often work better during specific hours:

• Breakouts work 7am–10am GMT
• Mean reversion thrives 2am–5am GMT
• Reversals occur more often post-3pm GMT

Using your existing setups (or even previous trades), look at a sample to see what may have happened.

 3. Add Time as a Trade Filter

Once you have some evidence from, test out simple rules like:

• “Only take trend trades between 7am–11am GMT”
• “No breakout entries after 3pm NY”

If you can code (or have access to someone who can), then you can backtest this quickly to see the impact of these filters. 

4. Know the News Calendar

Most high-impact data is released at predictable times — make knowing what is happening and when part of your daily trending agenda. These contribute to the characteristics of a session, but also may flip what is standard on its head. 

Reference in your plan the major data points and how you are going to manage potential entry setups.

Trade With the Market — Not Just the Setup

The best trades don’t just have good structure; they also happen at the right time.

Logically, if you want cleaner trade setups, high-probability entries, and improved consistency, then aligning your trading strategies with the market clock makes sense.

It’s a simple shift that most traders ignore — perhaps to their detriment. Finding the best time of day to trade for your trading strategy could be one of the things that helps develop your trading edge. 

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