Many people like to sleep at night. Many, but not all. Traders generally prefer to make binary options trades at night. It doesn’t matter what it is connected with, with the regime or with the main job, which takes away the day.
The fact remains. Today we will find out what the characteristics of these negotiations are and what the most “owl” traders should pay attention to first.
The market day is divided into sessions:
Session / opening time (Brasília time) / closing time (Brasília time):
- Asian 18:30 – 06:00
- European from 4am to 12:30pm
- American 09:30-162:00
- Pacific 7:00 p.m. – 1:00 a.m.
The main features of overnight trading in binary options
All exchanges in Europe and America close at night. And since London, New York, Frankfurt and other cities in the Old World and the United States are global financial centers, for obvious reasons market activity during these periods also decreases.
However, at the moment the stock exchanges in Asia and Oceania are awake: Japan, China, Australia, New Zealand. Exchanges in these countries are actively trading in the market. However, its activity is still significantly lower than the European and American markets.
And since we are talking about the markets in Asia and Oceania, let’s remember the trading floors on which they work. In one of the previous articles, we talked about “the best time to trade”, in which we talked about each trading session. But, two of them also need to be mentioned.
Asian trading session
Stock exchanges in Japan and other Asian countries start trading at 9:00 pm Brasília time. And they are the engine of the entire foreign exchange market in the world until 4 am. After that, volatility increases as trading begins on European exchanges. And traders leave Asia for a well-deserved rest at 5 am.
At this time, the price usually shows movement without sudden jumps. An exception may be the period from 10 pm to midnight. At this time, important news is usually released in Asia, so relatively sharp fluctuations are possible.
Furthermore, before trading binary options at night, it is worth monitoring in the chart history how currencies behaved during the American trading session. If during this period the market is very active, it will probably “rest” at night.
Pacific negotiating session
It is even less volatile than the Asian session because it does not overlap in any way with the opening hours of the American or European exchanges. In this range, the Australian and New Zealand dollars, as well as the Japanese yen, are the most active. The rest is almost always horizontal. This means that to make money here, you need to have the skills and strategy to work during the market consolidation period. Next, we will talk more about this strategy.
Strategy for binary options “Night Channel”
Now let’s see how to trade binary options at night. We have already said that most currency pairs are horizontal from the afternoon until the early morning. This means we need a strategy that allows us to use this resource to our advantage. We have one and at the same time, the overnight strategy for binary options is extremely simple. No complicated indicators needed. We will only use 2 lines to build the channel.
To trade the “Night Channel” binary options strategy, you need to plot the support and resistance level on the chart based on the lows and highs. An example is in the image below.
We see that around 8:00 pm the EUR/USD pair entered a horizontal position and this lasted until 11:00 am the following day. And during this period we were able to carry out several operations.
You need to build horizontal support and resistance levels along the high and low. Furthermore, we will operate exclusively in a recovery of one of the lines.
When we see that the candle has touched the upper level with its body or shadow, we open a trade downwards. By touching the lower level, we conclude an increase contract. Let’s take the same night and the same asset as an example.
We marked all the signs that appeared with arrows. Only 1 of them turned out to be unprofitable (marked with a black arrow). And even in this case, losses can be minimized. When at night the quotes break one of the levels, they still return to the channel. And it happens almost immediately. Therefore, after the losing trade is closed, we will open another one in the same direction.
And finally. To find an entry point, open a chart with M15 timeframe and open a trade for 45 minutes, i.e. 3 candles.
Overnight indicator strategy for binary options
You can also search for binary options entry points at night using the well-known Bollinger Bands indicator. The principle of operation is no different. We also trade in a recovery from extreme levels.
However, after testing, we can conclude that the variant with horizontal support/resistance levels is even better.
Using the Bollinger Bands indicator, you will find fewer signals and its accuracy will be a little worse.
Advantages and Disadvantages of Trading Binary Options at Night
Night traders can face advantages and disadvantages, see what they are. Let’s start with the pros:
- High market predictability. Strong, unexpected outbreaks are extremely rare. Of course, many traders benefit from this;
- Even beginners will be able to operate. The “Night Channel” binary options strategy, which we analyzed earlier, is very simple and can be implemented without any problems. The main aspect is to delimit the levels correctly;
- Psychologically easy trading. Price fluctuations are smooth, the strategy is simple. All of this allows us to carry out operations without much stress.
Now, let’s talk about the cons:
- It can be difficult to reconcile. Not every trader can sit comfortably in front of the monitor at night. If you are usually awake during the day, at night you will probably find distractions and other factors that can affect your sleep;
- Few strategies available. Most trading methods are designed to trade in line with trends. And since in most cases there is no market trend, we are unable to implement these strategies.
Should you trade binary options at night? We cannot make specific recommendations, but please bear in mind that this method has pros and cons. You must decide which aspects are most important to you. In any case, many brokers offer a demo account. Use it as instructed for a few nights to decide whether it is interesting to make a real investment or not.
