Stocks & Trading Education Hub What is The Best Time to Trade Crypto – Crypto Trading Time Frames
Maryam Jìnádù
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Cryptocurrency trading presents both incredible opportunities and inherent risks. One crucial factor that significantly influences trading outcomes is the timing of your trades. In this guide, we’ll delve into the intricacies of the best time to trade crypto, exploring the advantages and drawbacks of various trading windows.

Best Time to Trade Crypto – The Non-Stop Nature of the Market

Explanation of the Cryptocurrency Market’s 24/7 Trading Hours

The crypto market operates around the clock, allowing participants to trade cryptocurrencies at any time, be it day or night. The decentralized nature of cryptocurrencies and the absence of a central exchange makes this possible. Unlike traditional stock exchanges that follow specific opening and closing hours, the decentralized nature of cryptocurrencies means that transactions can occur at any moment, facilitated by various online platforms and exchanges.

Factors Contributing to the Continuous Trading Availability

Several factors contribute to the non-stop trading availability in the crypto market:

  1. Decentralization: The decentralized structure of cryptocurrencies eliminates the need for a central authority to oversee transactions, enabling users to trade directly with one another. This is one reason our article; 10 Best DeFi Apps 2023 Revealed is so popular.
  2. Global Participation: As one region’s trading day ends, another begins, ensuring a continuous flow of transactions.
  3. Internet Connectivity: The digital nature of cryptocurrencies and the widespread availability of the Internet enable users to access trading platforms and execute trades from virtually anywhere, at any time.
  4. Lack of Regulations: While regulatory frameworks exist in some regions, the lack of a unified global regulatory structure means that there’s no single entity dictating trading hours.
  5. Cryptocurrency Exchanges: These online platforms match buy and sell orders, allowing users to trade at any time of day.
  6. Market Demand: The increasing demand for cryptocurrencies has led to a constant stream of trading activity.

Best Times to Trade Crypto: Market Liquidity and Volatility

How Liquidity and Volatility Vary Across Different Times of the Day

Liquidity and volatility are two critical factors that significantly impact the crypto market. Liquidity, defined as the ease of buying or selling an asset without causing significant price changes, varies throughout the day due to changing trading volumes across different time zones. High liquidity is often observed during overlapping trading sessions.

Volatility, on the other hand, represents the price fluctuations of a cryptocurrency. Volatility tends to be higher during periods of increased trading activity and major news releases. Traders must consider these factors when selecting the best time to enter or exit positions. This should also be a consideration in selecting any of the Best Paper Trading Apps 2023 – Pros & Cons.

The Impact of Trading Volume on Price Movements

Trading volume plays a crucial role in the cryptocurrency market, as it reflects the number of assets being bought and sold within a given time frame. Higher trading volumes are often associated with increased price volatility. Thus, we recommend that you allocate a small proportion of your investment  into the Best Penny Stock Apps 2023.

When trading volumes are low, price movements might be subdued, and trends might be less pronounced. Conversely, when trading volumes surge, the market is more likely to experience sharp price fluctuations as supply and demand dynamics shift rapidly.

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When does the Crypto Market open and close?

The cryptocurrency market never sleeps. It’s a 24/7, 365-days-a-year market, devoid of any official opening or closing times. This round-the-clock operation is due to the decentralized nature of cryptocurrencies. Without a centralized governing body or physical location, digital currencies like Bitcoin, Ethereum, and countless others trade non-stop across various exchanges worldwide.

This continuous operation offers both opportunities and challenges. On the one hand, traders can capitalize on market movements at any hour, adjusting strategies and making moves whenever they see fit. On the other hand, the relentless nature of the market can lead to quick, unexpected shifts in coin values, necessitating constant vigilance.

For those used to the 9-to-5 routine of stock exchanges, the crypto world can be both exhilarating and daunting. While there’s no opening bell or closing whistle, it’s essential to establish personal trading routines, ensuring balance and avoiding burnout in this always-on market.

Crypto Trading Sessions Around the World

Overview of Major Crypto Trading Sessions (Asia, Europe, North America)

  1. Asian Trading Session: The Asian trading session initiates the global crypto trading day, with major markets in Japan, South Korea, and China participating. This session is often characterized by relatively lower trading volumes compared to other sessions. As a result, price movements might be more gradual during this time.
  2. European Trading Session: As the Asian session transitions to Europe, trading activity tends to pick up. Europe, especially London, and Frankfurt, contributes significantly to the cryptocurrency market’s liquidity and trading volumes. This session often witnesses more pronounced price movements and tighter bid-ask spreads.
  3. North American Trading Session: The North American session, led by the United States, is a key driver of cryptocurrency trading activity. The overlap between the European and North American sessions results in peak trading volumes and heightened volatility. New York, in particular, is a major hub for crypto trading, and its session often sets the tone for the day.

Key Characteristics of Each Trading Session

Asian Trading Session

  1. Time Zone: Primarily during the Asian daytime hours (GMT+9 to GMT+2).
  2. Characteristics: Lower trading volumes, relatively stable price movements, gradual price trends.
  3. Opportunities: Traders might observe the initial reaction to news and developments that occurred outside of the Asian session.
  4. Challenges: Limited volatility and potentially wider spreads due to lower liquidity.

European Trading Session:

  1. Time Zone: Overlaps with the Asian session and extends into the European daytime hours (GMT+2 to GMT+1).
  2. Characteristics: Increasing trading volumes, heightened price movements, tighter spreads.
  3. Opportunities: Traders can capitalize on increased volatility and liquidity as European markets come into play.
  4. Challenges: The market’s rapid pace can lead to quick price fluctuations, requiring careful risk management.

North American Trading Session:

  1. Time Zone: Overlaps with the European session and extends into the North American daytime hours (GMT-4 to GMT-8).
  2. Characteristics: Peak trading volumes, significant price movements, active market participation.
  3. Opportunities: Traders can benefit from high liquidity and volatility, presenting numerous trading opportunities.
  4. Challenges: The fast-paced environment can expose traders to sudden and sharp price swings.

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Overlapping Crypto Trading Sessions

Identifying Periods of Higher Trading Activity Due to Session Overlaps

The overlapping trading sessions occur when two major trading regions are active simultaneously. These periods typically witness a surge in trading activity, as participants from both regions engage in buying and selling cryptocurrencies. The most significant overlaps occur between the European and North American sessions.

During the overlap, traders can expect higher trading volumes, increased liquidity, and potentially more pronounced price movements. This convergence of activity often leads to faster execution of trades and reduced bid-ask spreads.

Merits and Demerits of Trading During Overlaps

✅ Merits

  • Increased Trading Opportunities
  • Enhanced Price Discovery
  • Reduced Slippage

❌ Demerits

  • Increased Trading Opportunities
  • Enhanced Price Discovery
  • Reduced Slippage

News and Events Impacting Prices

The Significance of News and Events on Crypto Price Movements

News and events have a profound impact on the cryptocurrency market due to its inherent volatility and speculative nature. Unlike traditional financial markets, where fundamentals play a predominant role, the crypto market’s sentiment can shift swiftly based on news related to technology developments, regulations, partnerships, macroeconomic factors, and more. This scenario also plays out with NFTs, that’s why it’s important for investors to be aware of the Best NFT Apps for 2023.

Positive news can drive prices higher as optimism spreads, while negative news can lead to sharp declines as fear and uncertainty take hold. Traders must stay informed about both industry-specific news and broader events that can influence market sentiment.

How Major Announcements Affect Different Crypto Trading Timeframes

The timing of major announcements plays a crucial role in how they affect the market. Depending on the nature of the news, its impact can unfold over various timeframes:

  1. Immediate Reaction (Minutes to Hours): Some news triggers an immediate market response. This can lead to significant price fluctuations within minutes or hours of the announcement. Traders who closely monitor news releases can capitalize on short-term price movements.
  2. Short-Term Trend Shifts (Hours to Days): Certain news items might have a more sustained impact, causing short-term trends to shift. Traders can identify and act upon these shifts using technical analysis and sentiment indicators.
  3. Long-Term Structural Changes (Days to Weeks): Major regulatory changes, technological upgrades, or industry-shaping events can result in longer-term trends. These changes may take days to weeks to fully materialize, offering traders the opportunity to adjust their strategies accordingly.

It’s crucial to note that the significance of news can vary based on market sentiment and prevailing trends. A positive announcement might have a more pronounced impact during a bullish market, while the same news could be overshadowed during a bearish phase.

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Time to Trade Crypto: Market Sentiment and Trading Volumes

Understanding the Correlation Between Market Sentiment and Trading Volumes

Market sentiment refers to the overall mood and emotions of traders and investors regarding the market’s direction. Positive sentiment often leads to higher demand, driving up trading volumes and prices. Conversely, negative sentiment can result in reduced trading volumes and downward price pressure.

The correlation between sentiment and trading volumes can be summarized as follows:

  1. Positive Sentiment and High Trading Volumes: When the market sentiment is positive, traders and investors are more likely to participate actively. This increased interest leads to higher trading volumes as more orders are executed.
  2. Negative Sentiment and Low Trading Volumes: During periods of negative sentiment, market participants might become more cautious, resulting in decreased trading volumes. Uncertainty and fear can lead to reduced activity as investors hold back.

Understanding this correlation can help traders gauge market dynamics and anticipate potential trend changes. Analyzing sentiment indicators alongside trading volumes provides a holistic view of market behavior.

Better Timing in Crypto Trading Using Sentiment Analysis Tools

Sentiment analysis involves monitoring social media, news articles, forums, and other sources to gauge the prevailing sentiment in the market. This analysis can be manual or automated using specialized tools and platforms.

Utilizing sentiment analysis tools can provide several advantages:

  1. Timely Insights: These tools can quickly aggregate and analyze large amounts of data, providing timely insights into the prevailing sentiment. This information can be invaluable for making informed trading decisions. To practice timeliness, we recommend that you take part in the Best Crypto Presales.
  2. Contrarian Opportunities: Sentiment analysis can identify instances where market sentiment is overly positive or negative, potentially signaling a reversal in price trends. Contrarian traders might use this information to take positions against the prevailing sentiment.
  3. Confirmation of Trends: Sentiment analysis can complement technical analysis by confirming or contradicting existing trends. If technical indicators suggest a trend reversal, sentiment analysis can help confirm or challenge that outlook.
  4. Risk Management: By understanding sentiment, traders can anticipate periods of increased volatility and risk. This awareness can prompt traders to adjust their risk management strategies accordingly.

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Scalping and Day Trading

The Suitability of Scalping and Day Trading in the Crypto Market

Scalping and day trading involve executing multiple trades within a single day to profit from small price fluctuations. In the crypto market, characterized by its volatility, these strategies can be highly effective due to frequent price swings.

Advantages of Scalping and Day Trading:

  1. Fast-Paced Profits: Scalping and day trading allow traders to capture quick profits from short-term price movements, often within minutes or hours.
  2. Reduced Exposure: Since positions are held for a short duration, traders are exposed to the market for a limited time, minimizing the impact of overnight risks.
  3. Multiple Opportunities: Crypto’s volatility generates frequent opportunities for scalpers and day traders to capitalize on price changes.

Challenges of Scalping and Day Trading:

  1. High Transaction Costs: Frequent trading incurs transaction fees, which can eat into profits, especially when trading with small price differentials.
  2. Time-Intensive: Scalping and day trading demand constant attention and quick decision-making, making them unsuitable for traders with limited time.
  3. Risk of Overtrading: Frequent trades can lead to emotional decisions and overtrading, potentially resulting in losses.

Choosing the right timeframe is critical for scalping and day trading success. In the cryptocurrency market, short-term traders commonly use timeframes ranging from one minute to 15 minutes.

  1. 1-Minute Chart: Extremely short-term traders can use the 1-minute chart to capture rapid price movements. This requires quick execution and a deep understanding of market dynamics.
  2. 5-Minute and 15-Minute Charts: These timeframes provide a slightly broader view while still capturing short-term trends. Traders can make more informed decisions with slightly less urgency.

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Swing Trading and Position Trading

Utilizing Swing Trading and Position Trading Techniques in Crypto

Swing Trading

Swing trading involves holding positions for several days to weeks, aiming to profit from medium-term price movements. In the cryptocurrency market, where price volatility is the norm, swing traders can benefit from identifying and capitalizing on trending market patterns.

Advantages of Swing Trading:

  1. Reduced Noise: Swing trading allows traders to filter out short-term market noise, focusing on more significant price trends.
  2. Lower Stress: Compared to day trading, swing trading requires less constant monitoring, making it suitable for traders with other commitments.
  3. Potential for Larger Gains: Holding positions for days to weeks enables traders to capture larger price movements compared to shorter timeframes.

Position Trading

Position trading involves holding positions for even longer periods, often ranging from weeks to months. This strategy is favored by those who want to capture major trends and are willing to withstand short-term volatility.

Advantages of Position Trading:

  1. Long-Term Trends: Position traders aim to benefit from long-term price trends, which can lead to substantial gains over time.
  2. Minimal Micro-Management: Position traders do not need to constantly monitor the market, reducing the emotional impact of short-term price fluctuations.
  3. Potential for Compounding: Longer holding periods allow traders to benefit from the compounding effect, where profits from successful trades are reinvested.

Ideal Timeframes for Holding Positions for Extended Periods

For swing trading and position trading, traders often focus on longer timeframes, including daily, weekly, and even monthly charts.

  1. Daily Charts: Swing traders can use daily charts to identify medium-term trends and make informed decisions based on the broader market view.
  2. Weekly Charts: Position traders often analyze weekly charts to capture long-term trends while minimizing the influence of short-term fluctuations.
  3. Monthly Charts: For those with a more patient approach, monthly charts provide a macro view of the market, suitable for identifying major trends and holding positions over several months.

Aligning Crypto Trading Times with Your Lifestyle

Tailoring Your Trading Schedule to Fit Your Daily Routine

Trading requires time, attention, and focus. Here’s how you can adjust your trading schedule to suit your lifestyle:

  1. Identify Your Most Active Times: Determine when you are most alert and focused during the day. Trading during these periods can improve your decision-making.
  2. Time Zone Consideration: Consider the major trading sessions that align with your time zone. If you’re in a specific region, trading during the corresponding session may provide more opportunities.
  3. Balance Work and Trading: If you have a full-time job, avoid trading during work hours. Focus on sessions that align with your evenings or weekends.
  4. Avoid Fatigue: Avoid overtrading or trading when you’re tired. Fatigue can lead to poor decisions and losses.
  5. Flexible Strategies: Choose trading strategies that match your schedule. If you can’t actively monitor the market, long-term strategies might be more suitable.

Setting Realistic Goals Based on the Time You Can Commit to Trading

Setting achievable goals is essential to maintain a healthy trading mindset. Consider the following:

  1. Frequency of Trades: Determine how often you can trade. If you’re available daily, short-term strategies like day trading might be feasible. Otherwise, longer-term strategies could be more appropriate.
  2. Time Spent on Research: Assess how much time you can dedicate to research and analysis. More active strategies require more research and monitoring.
  3. Realistic Profit Targets: Set profit targets that align with your trading frequency and available time. Overambitious goals can lead to undue stress.
  4. Risk Management: Consider your risk tolerance and capital allocation. Adjust position sizes and stop-loss levels based on your trading frequency.
  5. Learning and Education: Factor in time for learning and education. Stay updated with market trends and continuously refine your trading skills.

Best Time to Invest in Crypto: Risk Management and Long-Term Planning

Importance of Risk Management Strategies for Any Trading Timeframe

Risk management is crucial regardless of your chosen trading timeframe. Here’s why:

  1. Preserving Capital: Implementing risk management techniques, such as setting appropriate stop-loss levels, helps protect your trading capital from significant losses.
  2. Reducing Emotional Impact: Risk management prevents emotional decisions caused by sudden price movements. Knowing your risk tolerance and having a plan in place keeps emotions in check.
  3. Consistency: Consistent risk management ensures that losses from unsuccessful trades are manageable, allowing you to stay in the market and benefit from winning trades.
  4. Longevity: Proper risk management increases your longevity in trading. Sustainable trading practices contribute to your long-term success.
  5. Adaptation: Risk management strategies can be tailored to different timeframes. Short-term and long-term traders alike can adjust position sizes and stop-loss levels to match their trading strategies.

How Long-Term Planning Can Complement Shorter-Term Trades

Long-term planning can enhance the outcomes of shorter-term trades in several ways:

  1. Contextual Understanding: Long-term planning provides a broader context for short-term trades. Understanding the market’s overall trends and dynamics helps traders make more informed decisions.
  2. Reduced Noise: Short-term price fluctuations can be noisy. Long-term planning helps traders focus on significant trends, reducing the impact of short-term volatility.
  3. Diversification: Long-term planning involves considering a diversified portfolio. While short-term trades focus on quick profits, long-term investments balance risk across various assets.
  4. Hedging: Long-term positions can act as a hedge against potential losses in short-term trades. A well-diversified long-term portfolio can mitigate the impact of short-term losses.
  5. Strategic Goals: Long-term planning involves setting strategic objectives. Short-term trades can be aligned with these goals, ensuring each trade contributes to your overall trading strategy.

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Best Time to Trade Crypto – eToro Complete Guide

eToro offers a user-friendly platform for crypto trading. Here’s a step-by-step guide to opening an account:

etoro homepage

  1. Navigate to the eToro website and click on “Create an account.”
  2. Provide Your Information like username, e-mail address, or register with social accounts like Facebook and Google.
  3. Review the terms and conditions, then proceed if you are okay with them.
  4. Click the “Create Account” button.
  5. Verify your e-mail.

Best Time to Trade Crypto – Conclusion

As you navigate through crypto trading, remember that timing is a critical factor in achieving success. By understanding the best times to trade, adapting to various trading sessions, and incorporating sound risk management strategies, you can position yourself for more informed and profitable decisions. Start your crypto trading journey on the eToro platform today and seize the opportunities the market offers. eToro is also our top choice of the Best Mutual Fund Apps 2023.

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Maryam Jìnádù

Maryam Jìnádù

Maryam Jinadu is a prolific crypto and fintech content writer who has been in the space since 2018. Her sharp insights and creative takes have earned praise from top industry publications, with her work appearing on notable sites like TradingPlatforms, Dappgambl, BuyShares, Swapzone - just to name a few.