Criticial Trading Hours – from an Asia-based trader perspective

Intra-day critical points during regular Asia equity trading

1. 8-10pm EST: Australia/Japan/Korea open at 8pm EST, followed by Taiwan opening at 9pm EST and China  and HK at 9:30pm EST.

2. 11:30pm-2am EST: Japan afternoon session starts at 11:30am EST; margin calls arrive at 11:30am in HK, too; China afternoon session starts at 1:00pm; Taiwan closes at 1:30pm, when HK starts; Australia/Korea/Japan closes at 2pm or so. This time period, however, is less importatnt than the 8-10pm EST period unless something really big hits Japan or Korea market.

Power Hours

 The Power Hours run from 8am to 12pm EST.

Yes, the most active trading period lasts only four hours every day! This is the US-European overlap session, which is the time when the world’s two most active trading centers cross — as the European session is closing and the US session is opening. It is a small, but very active, window that some currency traders call the “hot zone.” And many professional traders focus their best efforts on trading during those four powerful hours.

Although Asian equity trading is closed by then, for anyone active in global index future trading, be aware of this Power Hour.

Cold Zone

The least active time to trade — dare we call it the “cold zone” — is the European-Asian overlap session. Most traders are sleeping (or taking a nap) during this short period. Trading volume is very thin and trends are unpredictable during this period. Stay out of the cold zone! However, this is a good time to get prepared for the opening of the European session.

The cold zone runs from 2am to 4am EST.

 

What does this mean: a global long/short equity manager can manage his time resources better by avoiding trading outside those hours. He can get himself off the Bloomberg screen by meeting companies and setting up conference calls during those less important hours, say from 10pm – 2am EST; or he can go home early to play his kids in the afternoon after 4am EST and have relaxed dinner with family in the evening till 8am EST.  And he can go to bed at 12 o’clock so that he can have at least 6 hours’ sleep each day. Hence, more balanced life style and much more efficient trading.

More importantly, a trader needs to be in his top condition when he trades. That’s why an Asia-based trader might be better off not trading US stocks at all – unless if you have to. Even so, it’d better to place the trade order in Asia hours with strict limits and leave those there.

It’s also critical to interpret the previous night’s US trading patter to position Asian portfolio one day ahead to profit from the constant volatility in the market.

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