Trade Commodities

What are the best hours to trade commodities?

From cattle to copper, commodity futures provide market participants with a variety of unique options. The diversity of these offerings allow active traders to conduct business on a near 24/5 basis. Aside from the Friday afternoon to Sunday evening weekend pause, extensive commodity trading hours are one of the largest benefits available to traders.

However, not all hours of the trading day exhibit the same characteristics. Many factors influence market behavior ― some positive and some negative. To shed light on the best trading hours, let’s break down the timing issue facing commodity futures.

Not All Hours of the Day Are Created Equal

If you’ve spent any time at all as an active trader, then you know that every minute during each session is unique. One of the keys to succeeding in the long-run is identifying the best times in which to put your capital in harm’s way. Here are a few characteristics that only the premium commodity trading hours have in common:

  • Strong participation
  • High degrees of liquidity
  • Consistent pricing volatility

Ultimately, being able to enter and exit the market efficiently is the name of the game. If the markets lack liquidity, then increased slippage and choppy price action become formidable opponents.

In addition, “quiet” or “cold” markets exhibit low levels of volatility, thus limiting potential rewards. Panning for gold on a frozen stream is a tough proposition ― be sure that your market is at least lukewarm before jumping in.

Popular Commodity Trading Hours

Whether you’re an energies trader or interested in grains and oilseeds, there is a specific time of day when the markets are most active. In many cases, these periods occur regularly in the half-hours preceding or following an opening or closing bell. As traders of all types rush to close out existing positions and enter new ones, liquidity increases. This phenomenon can create an array of strategic trading opportunities.

Here are a few of the most popular futures products and their associated commodity trading hours (all times EST):

The commodity trading hours listed above are representative of the electronic trading day for each product. In addition to these periods, there are some nuanced times that are typically active. Here are a few of them:

  • WTI Crude Oil: WTI crude exhibits added volumes during the traditional pit trading hours of 9:00 am EST to 2:30 am EST.
  • Ag Futures: Any release of a WASDE report typically drives participation to the ag futures markets.
  • Gold: Gold has a tendency to exhibit greater pricing volatility around the London session open (4:00 am EST), the U.S. pre-market hours (8:30 am EST–9:30 am EST), and U.S. Wall Street open (9:30 am EST).

Also, it’s a good idea to always be aware of the traditional “cash open” on Wall Street. The NASDAQ and NYSE begin trade at the same time every day: 9:30 am EST. Once the opening bell rings on the NYSE, a rush of participation can hit any number of markets. While equities index contracts such as the E-mini S&P 500 exhibit heightened volatility in concert with the action in stocks, commodities often react as well.