What are the best markets to trade with a day job?

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If your learning to trade you will likely be balancing your trading and a day job. A common question among aspiring and part time traders is, what are the best markets to trade with a day job ?

In the following post I will answer this questions by providing my ‘personal opinion’ for what are the best markets to trade with a day job. If you live outside the US time zone and have difficulty trading the US session. The information in this post will also be useful.

So, what are the best markets to trade with a day job? or what are the best markets to trade if I live outside US time zone?

If at all possible your first choice should always try to trade the US session. The US markets offer the highest trading liquidity, best volatility and lead all other global markets. If trading the US session is completely out of the question then European and Asian futures markets have alternatives but the these markets lack the trading volumes of the US session and every effort should be made to trade the US session.

If you haven’t already read my post: What are the best markets to day trade? Click here to get further background before reading on.

Market Sessions

There are 3 major global market sessions: The Asian, European and the US or North American sessions.

  • The Asian session opens first, the major market is the Tokyo Stock Exchange. The Asian session opens at 12am GMT and closes 9am GMT ( 7pm-4am EST).
    •   The biggest and most liquid markets during this session are the Japanese equities and Forex markets.
  • The European Session, the major market is the London Stock exchange. It opens 7am GMT and closes 4pm GMT ( 2am-11am EST).
    •   The biggest and most liquid markets during this session are the German equities and Forex markets.
  • The US Session, the major market is the New York Stock Exchange. It opens 1pm GMT and closes 10pm GMT ( 8am-5pm EST).
    • The US markets are by far the largest markets globally. What happens in the US market is very important. The US market leads all other global markets.
    • US Markets Pre-Open and Open –  The first few hours of the US session are called the pre-open and open (1pm-5pm GMT). This time has the most news releases and is the most activity of all markets. It’s also the end of the European session. At this time the liquidity and volatility are the greatest. Perfect for day trading.
    • End of US Session – Towards the end of the US session the volatility reduces and any big moves for the day have generally played out before 5pm GMT (12pm EST). The end of the US session can be difficult to trade.

What are the best sessions to trade based on time zone?

If your working a day job the following is a broad guide to the market sessions available to trade based on your time zone..

North and South America based – If your based in the US with a day job and can’t trade the US Market open your options are: Early morning to trade the European session /US session pre market open and evening to trade the start of the Asian session. If you’re based on the west coast look to  trade the US session open early morning.

Europe and Africa based – If your based in Europe your options are limited to the Asian session early morning.

Asia Pacific based – In Asia Pacific region your options are the  European session and the US open in the early to late evening.

What are the best markets to trade with a day job?

Trading the US markets session with a day job

I feel it is important to reiterate that trading the US session should always be your first option when considering what market session to trade.  Before trading outside the US markets consider the following options:

Change Work hours – Negotiate with your employer to change your working hours around the US market open. starting work later will work for US based traders. Starting early and finishing early is a good option for European based traders and starting later for Asia pacific based traders are good options.

Change sleeping patterns – Ok, this one is a bit more challenging and requires significant commitment. But for traders based in Australia the US market open in the late evening to early hours of the morning. In these situations sleeping early and waking for the open before trading for a few hours then returning to bed for nap before morning is an option for some traders committed to trading the US Session.

If you can manage to trade the US session click here for the the best markets to day trade.

Trading outside the US markets session with a day job

The principles for choosing a market no matter the session or time zone remain the same. To give ourselves the best opportunity for success, we are looking for markets with:

  1. High liquidity – High volume markets with lots of active participation. This provides low bid ask spreads and allows movement in and out of positions easily and without slippage.
  2. Volatility – Volatility provides decent price movements and ranges throughout the day. This provides the opportunity to profit. Markets that move to slow are almost impossible to trade. Conversely markets that jump around to much based on news events become equally as difficult.

Other key considerations when selecting a market to trade are a level playing field, low brokerage fees, manageable risks for taking on leverage, the quality of the price action also the tax advantages of trading one market over another.

If you have read my previous post what are the best markets to day trade you will know that I prefer the futures market for day trading. Futures are an excellent market to trade. The high volatility, fast price movement, high liquidity, and quality price action is perfect for day trading.

My favourite futures instrument is the e-mini S&P500 (ES). I consider the ES to be the go to instrument for experienced traders and also anyone learning to day trade. Being a derivative index product of the US equities market, trading outside the US session volumes drop dramatically. It can still be traded outside these hours but other futures market instruments can also be considered that offer similar options.

What are the best markets to trade with a day job?
15 min volume chart of a single days trading on the ES. Daily volumes on the ES average 1M contracts. This dwarfs an other futures contract. making it the number one choice as a day trading instrument – What are the best markets to trade with a day job?

What are the best markets to trade in the European Session?

Trading the European session in my opinion is the next best option after the US session. The best market options being the EURO FX futures (6E) and Crude Oil futures (CL) contracts.

I prefer the EURO FX futures because it offers the highest volume of any other futures market from the start of the European session through to the start of the US session. Its daily trade volume averages around 200k contracts.

What are the best markets to trade with a day job?
15min volume chart of a single days trading on the EURO FX (E6) futures. Daily volumes on the E6 average 200k contracts making it a good day trading alternative outside the US session – What are the best markets to trade with a day job?

The next best alternative to the EURO FX futures is the Crude Oil futures contracts. Crude or CL has Daily volumes on the average around 500k contracts however the majority of this volume is traded during the US session. Crude volumes during the the European session is similar to the EURO FX which makes it an excellent alternative the EURO.

Both the EURO and Crude Oil offer consistent price patterns and big trending moves making them good day trading markets.

The downside of trading commodities like crude is they are more sensitive to micro events such as news and report releases such as crude oil inventory reports. Crude Oil in particular is quite volatile meaning prices tend to jump around more than indices and currencies. Which is why generally my first choice is to trade those markets.

What are the best markets to trade with a day job?
15 min volume chart of a single days trading on the Crude Oil (CL) futures. Daily volumes on the CL average 500k contracts – What are the best markets to trade with a day job?

What are the best markets to trade in the Asian Session?

The Asian session offers the least appealing option for day traders. If you can trade the European session as a first alternative to the US session, do so. The Asian session lacks the volume seen in the larger European and US markets and tends to be a little sleepy for day traders.

The YEN FX (6J) futures offers the highest volume of any futures market in the Asian session. Daily trade volumes average around the 150k contracts. The highest percentage of this volume is also done during the US Session.

What are the best markets to trade with a day job?
15 min volume chart of a single days trading on the YEN (6J) futures. Daily volumes on the 6J averages 150k contracts – What are the best markets to trade with a day job?

Conclusion

For Traders working a day job or living outside the US time zone finding it difficult to trade the US session. The reality is there isn’t a comparable market to those offered by the US session. In my personal opinion if you are serious about your trading the first option should always be to do what it takes to trade the US session. At least the first 2hrs. If you must trade an alternative market the European session has the best options. Either the EURO FX (6E) or the Crude Oil (CL) futures are alternatives. For me the Asian session lacks the volume required for day trading and I wouldn’t consider this session a good option.

 

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