A Typical Trading Day In The E-mini S&P500 Futures
The GLOBEX emini S&P500 futures contract is unarguably one of the best trading instruments for a full-time professional day trader. It is traded more than 23 out of the 24 hours each trading day, and allows money managers from all over the world to hedge their exposure in the markets. Daily volume in the ES is currently about 2 million contracts and the spreads are very tight with at least a couple of thousand contracts on the bid and ask during regular trading hours (RTH). For a day trader, there are several key periods during the day when the futures will display increased volatility due to events unfolding during the trading day. These periods are potential goldmines for patient and nimble scalpers.
Note: All timings are Eastern Time (ET) unless other wise stated.
After Hours and Pre-Market Trading
After the previous day's close at 1615hrs, ES opens the new trading day at 1630hrs, where it trades for an hour till 1730hrs. This period is normally uneventful unless there are earnings releases by major companies, which are out of expectations. It is not uncommon for ES to swing 10 to 20 points on a surprise earnings announcement, especially a bad one. ES will take a 30 minute GLOBEX maintenance break from 1730-1800hrs and thereafter trade continuously all the way until the close.
Asian Market Trading
The period between 1800-2200hrs is when the Asian markets begin to start their trading day. The major Asian markets to keep an eye on are the Nikkei, Hang Seng and KOSPI. The effect on ES trading is normally minimal unless there are surprise announcements on the economic front e.g. Bank of Japan (BoJ) interest rate announcements. Trading during this period is typically light and not ideal for traders looking for 5-6 point swings.
Europe Market Trading
From 0300hrs (0800hrs GMT), Europe starts to open and this is one period where the ES starts to display increased volatility. The major markets to watch are the FTSE, DAX and CAC. The increased volatility can last for 1-2 hours until the European markets stabilize. Good day traders can catch swings of 3-4 points during this period and liquidity is decent with a couple of hundred contracts at the bid and offer.
Most of the economic reports of the day are released from 0830hrs to 1000hrs. ES can get extremely volatile at 0830hrs especially as there may not be sufficient liquidity available to cushion a surprise economic report. Some of the key reports normally released during this period are:
- Initial Claims
- Michigan Sentiment
- Unemployment Rate
- CPI, PPI
- Chicago PMI
- Existing Home Sales
- Housing Starts
- Nonfarm Payrolls
- Factory Orders
- Consumer Confidence
Yahoo Finance has a good online economic calendar to help monitor report release times and dates.
Europe Trading Close
The period from 1000-1130hrs ET is especially significant as trading in Europe is building up to a crescendo before their close. Most ES traders will be watching out for trend reversals in ES during this period. Experienced traders will normally try to anticipate tops or bottoms and will enter once technical indicators confirm the move (with tight stop loss orders). Some of the favorite indicators used by ES traders include pivot points and the 5 and 20 period moving averages.
The period between 1200-1400hrs is generally quiet and the market typically settles down to a trading range. Chances of false breakouts/breakdowns during this period are normally higher. One of the strategies nimble traders use for range trading is to become a liquidity provider when stops are run i.e. if buy stops are hit, take a short position and vice versa.
End of Regular Trading Hours
The period from 1400-1500hrs is another period when reversals normally occur. Unless it is a strong trend day when markets gap and continue to rally or sell-off to the close, a wise scalper can pocket at least 3-4 points by successfully catching a reversal during this period. While the stock market regular trading hours officially end at 1600hrs, ES carries on trading and officially closes at 1615hrs.
**NB - This typical trading day also applies to the emini NASDAQ 100 futures (NQ) and the mini Dow futures (YM).