August 13,2024 @07:32 AM
You diligently follow the markets throughout the day and while you want to trade, you find it challenging due to your work commitments clashing with peak trading hours. The lack of volume during the overnight sessions can be discouraging, causing you to believe that your opportunities to trade are limited. However, as a firm with clients across various time zones around the globe, EdgeClear provides clients with access to futures on exchanges that are quite liquid and volatile outside the standard 8 am to 4 pm trading window. I encourage you to check out our Contract Specifications & Margins page, to see the most popularly-traded products by traders using EdgeClear.
There are many more products than the ones I will discuss, but the four most popular ones that I have encountered are:
- The Nikkei 225, traded on the Osaka Exchange (JPX), as well as its mini and micro counterparts.
- The Stoxx 50 and the Eurobund, both of which trade on the Eurex Exchange.
- European Allowances (EUAs), which are traded on the Endex Exchange.
- Automated Trading Systems to gain exposure to the daytime market movements.
If you choose to leverage these options, you have the ability to engage in trading activities at times that fit your schedule – ensuring that you can be involved in market opportunities.
1. The Nikkei on the Osaka/JPX Exchange
The Nikkei and its Mini and Micro equivalents are among the most liquid and volatile products available for evening trading. With opening hours at 8:45 am JST (6:45 pm CST), which makes it ideal for individuals wanting to trade in the evening. The Nikkei is an extremely popular and liquid market that is made up of highly capitalized major Japanese corporations, and is the leading stock index of Japan.
The Nikkei has three variations to choose from: the standard Nikkei; the Mini Nikkei; and the Micro Nikkei—each with distinct contract specifications. Below is a table that highlights the important characteristics of the Nikkei:
| Contract Type | Tick Size | Multiplier | Per Tick Size | Rough Conversion (160 yen/USD) |
| Nikkei (Standard) | 5 Yen | 1000 | 5000 | 31.25/tick |
| Nikkei (Mini) | 5 Yen | 100 | 500 | 3.125/tick |
| Nikkei (Micro) | 5 Yen | 10 | 50 | 0.3125/tick |
Similar to the S&P or US indices the major factors influencing the Nikkei price include economic data, corporate earnings, monetary policy as well as exchange rates, among others. These factors collectively mold market dynamics and influence investor sentiment, in essence driving fluctuations within the Nikkei index.
Most of the economic data releases tend to occur around 6:30 to 9 PM CT. The timing coincides with the prime evening trading hours back here in the US.
The Nikkei index is supported through the CQG data feed, which is available on most major trading platforms. This includes the CQG suite of products, Sierra Charts, as well as many others. We suggest trading the Nikkei Index through CQG on our advanced and customizable platform, EdgeProX. Traders have access to full depth data for a fee of just $29 per month.
To get more information about trading the Nikkei and getting assistance tailored to your trading goals, please contact the EdgeClear team.
2. Eurex Products (Stoxx50 and EuroBund)
An exchange that is active during US early morning and pre-work hours is Eurex, one of the most comprehensive and liquid futures exchanges in the world and a pioneer in electronic trading. Eurex’s two most traded products are the EuroStoxx50 and the EuroBund.
EuroStoxx50 futures are the most actively traded product on Eurex, allowing for exposure to some of the largest companies in the Eurozone. Trading for it begins at 7:15 pm CT, with the majority of their trading activity occurring between the hours of 1am CT and 10:30 am CT, according to Eurex. This timing allows for traders to engage with the European markets. The Euro Stoxx50 contract is valued at 10 times the value, giving it a minimum tick size of €10, approximately $11 per tick. Similar to the Nikkei, the factors affecting Stoxx50 prices are: economic data, corporate earnings, monetary policy, and exchange rates, among others.
Another Eurex product is the EuroBund, which represents futures on bonds issued by the German government. They are the second most traded product on Eurex. Similarly to the Stoxx50, their opening hours are 7:15 pm CT and most of the overnight volume happens around the hours of 7 PM CST and 11 PM CST. The Eurobund also has a tick size of €10, or $11 per tick. While the similar factors that affect Nikkei are similar to other indices, the key factors for their debt security are monetary and fiscal policies, inflation expectations, as well as global economic conditions, and more.
Both the Stoxx50 and Eurobund as well as all Eurex products are available to trade on both Rithmic and CQG. Eurex products are supported on EdgeProX; Sierra Charts; as well as many other platforms. Their market data costs make it an affordable exchange to trade at $19 per month on CQG for full depth and $20 per month on Rithmic for full depth.
3. EUAs and Mini EUAs. (ICE Endex)
EUAs (European Union Allowances) on Ice Endex have been established products in the market for some time and have recently seen an increase in trading and volume. They are futures contracts that are based on allowances issued by the EU Emission Trading system, which permits companies to emit specified amounts of carbon. These contracts are used by both hedgers and speculators to predict and manage the future price of 1 metric ton of carbon emissions.
As a response to market demand, the ICE Endex exchange launched a mini version of the contract this year, which is 1/10 the size of the normal EUA. The trading hours for EUA futures are from 1 am CT to 11 am CT, accommodating early morning trades in the US, evening hours in Asia, and regular business hours in Europe. The tick sizes are €10 for the standard contracts and €1 for the mini contracts.
The factors that influence EUA prices differ slightly from those affecting other financial products, such as the ones previously listed. Major elements include economic activity, energy prices, weather conditions, and regulatory changes regarding emissions within the EU. These variables create a dynamic trading environment in which market participants must remain informed about both global and economic shifts and regulatory developments.
EUAs are available to trade through the data provider CQG with the CQG suite of platforms as well as Sierra Chart.
4. Automated Trading Systems
I know what you’re thinking: at the end of a hard day’s work, you may prefer to sit back and enjoy the evening, but you might feel disappointed that you can’t get exposure to futures, especially in US futures markets like the ES. Fortunately, at EdgeClear, we offer completely autonomous trading systems that handle the ES as well as the MES for you.
Our systems use machine learning algorithms and quantitative data analysis to make data-driven decisions. These systems autonomously take a long or short position during the market open and place targets and stops, aiming to close positions by the end of the trading day.
Unlike traditional funds that are constricted to only long or short positions, our automated systems can go both long and short. This capability allows for positive returns within a variety of market conditions. Having the ability to adjust positions allows you to be positioned to capitalize on market movements.
Additionally, these systems offer preferential tax treatment compared to equities. This advantage, combined with the system’s employed strategies, provide for a unique investment opportunity.
Interested in learning more about our Quant Execution Programs?
Schedule a consultation with our team today!
Conclusion
Ultimately, while these products may differ from what you are accustomed to and may lead to some pushback at first, they offer a compelling alternative for anyone seeking higher liquidity during the evening or early hours. If you are disappointed by the evening volume of typical CME or other US-based products, the aforementioned products may be the solution to your needs.
Before you begin trading, it is important to develop a strong understanding of these products. Be sure you familiarize yourself with the timing of economic data releases and other pertinent information that could affect market volatility and, therefore, risk market movements. I would say that understanding the factors that make up these products is just as important as the focus and attention that you bring into trading. I also strongly recommend taking the time to research, practice, and gain a stronger understanding of these products in a simulated environment before jumping into live trading. Having this hands-on experience may help you to gain confidence in your trades and get a deeper understanding of the complexities within market dynamics.
Remember, there is no single “right” answer when it comes to trading and there isn’t one product that you must trade exclusively. Having a strong mental edge and being willing to explore different products and their offerings can be beneficial to you towards finding a product that fits with your trading style and preferences.
At EdgeClear, we are here to support you wherever you’re at on your trading journey. Our team utilizes our industry experience, passion, draw to innovation, and relationships to help traders to reach their long-term goals. We encourage you to reach out to us with any question or for guidance on the futures industry and our services—our team’s here to help!
Disclaimer: Derivatives trading involves a substantial risk of loss and is not suitable for all investors. Opinions expressed are solely their own opinions and do not reflect the opinions of EdgeClear.
~ Max Hessling, Commodity Broker
