Optimize Your Profitability by Trading the Overnight Futures Hours | StoneX

Unlike Wall Street, the futures markets are open for business on a near-24/5 basis. For the active trader, these extended futures hours open the door to countless opportunities and strategic possibilities. Let’s take a look at the essential tenets of overnight trading.

The U.S. Overnight Session

The rise of the electronic marketplace has given futures exchanges the ability to facilitate trade around the clock. Aside from a short break to clear and finalize each session’s transactions, vendors supply continuous market access to their clientele. People are no longer geographically limited; motivated individuals are free to trade markets around the world, regardless of time constraints.

Business Hours

In the United States, overnight futures hours are those that fall between each session’s daily halt and the next day’s morning open. However, it is important to realize that the morning open isn’t necessarily a concrete time, but rather a period when American markets begin trading with “normal” liquidity. Generally, 7 a.m Central Standard Time (CST) is a safe estimate of when U.S. liquidity providers will begin addressing the markets.

Here is a listing of the overnight hours for several of the Chicago Mercantile Exchange’s (CME) most popular products (all times CST):

As you can see, the timing of each session’s trading halt differs according to the product. Also, the hours when standard participation resumes vary according to asset class and the day’s economic calendar.

Market Attributes

If you’re going to attempt overnight trading, then it is important to understand that not all futures hours are equal. For example, 1 a.m. CST isn’t the same as 8:30 a.m. CST! Here are several overnight nuances that traders need to be aware of:

• Reduced liquidity: Compared to the standard U.S. session, most futures contracts trade with a vastly reduced market depth. This can lead to larger bid or ask spreads, choppy price action, and increased slippage. However, the limited volumes can bring opportunities to viable breakout and position trading strategies.
• International opening bells: The U.S.-based futures markets are global in scope. Subsequently, the opening bell of several major sessions typically enhances participation. Two key times to be aware of are the Asian (Tokyo, 6 p.m. CST) and European (London, 2 a.m. CST) openings.
• Global economic calendar: International economic reports, government disclosures, and central banking announcements can all bring instant volatility to the markets. To trade overnight successfully, it is important to outline the session’s featured events on a 24-hour horizon.
• Margin requirements: Because of the unique market conditions of the overnight session, margins may be adjusted by the exchange and brokerages to account for any added risk. As always, it is up to the trader to find out the required margin for the contract being traded.

In addition to these four factors, it is critical to stay abreast of current market conditions. As an example, during the COVID-19 financial panic of March 2020, the futures markets regularly traded with heavy volumes throughout the U.S. overnight. Trade of the E-mini S&P 500 was even halted on multiple occasions during March 2020 due to a violation of the CME’s dynamic circuit breakers.

Attack the Markets 23/5 with StoneX

One of the great things about the modern marketplace is accessibility. As long as you have an internet connection, risk capital, and a brokerage account, you can trade any futures hours you deem fit.