The Best Commodity Trading Hours: Timing Is Everything | StoneX One

From cattle to copper, soybeans to silver, and crude oil to cotton, commodity futures provide market participants with a variety of unique market exposures. The diversity of these markets enables active traders to conduct business across various asset classes on a nearly 24-hour basis. Aside from the Friday afternoon to Sunday evening pause—we all need a break—these markets are nearly always active.

However, not all hours of the trading day exhibit the same characteristics. Many factors influence market behavior. These factors may be positive or negative based on your trading style and strategy. Let’s discuss the best trading hours and timing issues facing commodity futures.

Popular Commodity Trading Hours

Whether you’re an energy trader, interested in grains and oilseeds, or a gold bug, there is a specific time of day when each market is most active. Typically this is at the opening bell and during the last half-hour of trading. As traders of all types rush to enter positions or close out existing positions, liquidity increases on the open and close. Liquidity is the lifeblood of trading success. It ensures frictionless entries and exits that avoid the dreaded slippage that can be the difference in a positive or negative profit/loss over time. Liquid commodity markets 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 ET):

You can view trading hours for all markets here.

The commodity trading hours listed above show 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:

• Traditional pit trading hours: Although commodity markets have evolved into electronic markets, the traditional floor trading hours are still a benchmark for many long-term traders. That is 9:30 a.m.-1:15 p.m. (CT) in grain markets and 9 a.m.-2:30 p.m. (ET) for energy markets.
• Economic reports: Although reports such as gross domestic product, the Consumer Price Index, and unemployment (usually released on Fridays at 7:30 a.m. CT) and Federal Reserve statements typically have a greater impact on financial markets, they also can move commodities, especially crude oil and gold.
• Agricultural reports: The U.S. Department of Agriculture (USDA) releases various reports, including the World Agricultural Supply and Demand Estimates and many others, that can have a major impact on agricultural commodity markets. Every Wednesday, the Energy Information Administration releases its Weekly Petroleum Status Report, which can have a huge impact on crude oil and other energy markets. There are many more, and every trader must know the time—and expectations—of every report that could impact the markets they trade.
• Major markets open: Financial-influenced commodities, particularly gold, tend to exhibit greater price volatility around the London session open (4 a.m. ET), the U.S. pre-market hours (8:30-9:30 a.m. ET), and U.S. Wall Street open (9:30 a.m. ET). The NASDAQ and NYSE begin trading at 9:30 a.m. ET. Once the opening bell rings, a rush of participation can hit any number of markets. Although equity index contracts such as the E-mini S&P 500 exhibit heightened volatility in concert with the action in stocks, commodities also often react.
  
  

Not All Hours of the Day Are Created Equal

One of the keys to commodity trading success is identifying the best times to trade. Premium commodity trading hours include the following characteristics: strong participation, high degrees of liquidity, and consistent pricing volatility. 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.

As noted above, the best times to trade are when the markets are most liquid, which tend to be at the open, close, and during traditional trading hours. Are there exceptions to this rule? Yes. Traders, particularly shorter-term day traders and swing traders, should avoid trading in front of important economic reports and USDA reports. These reports, whether financial or agricultural, can create volatility spikes, resulting in large swings that can put you in a position and take you out through a stop-loss within seconds of the report’s release.  

Although overnight commodity prices can be volatile because the night session’s lack of liquidity adds risk, it can also offer opportunity. Traders use strategies that can exploit this lack of liquidity. A relatively large trade or market rumor will move overnight commodity prices more substantially than during the day. These moves are typically overdone, and a market will often retrace any gap created during the following market opening. A trader can successfully fade these large moves in overnight hours, creating a reversion-to-the-mean opportunity.

This type of trade may require a higher degree of sophistication and experience, and it highlights the importance of knowing how the markets move at different times of the trading day. 

Getting Started with Commodities

Commodity futures offer a unique way to both preserve capital and earn excess returns. Importantly, they provide a noncorrelated alternative to a traditional stock and bond portfolio. For insights into how to trade commodities to achieve your financial goals, download our Futures and Options Strategy Guide today.