Best Time to Play the Stock Market
Traditional investing was aimed at the long-term, trading today is short-term. The trader starts by buying stock then holds out for a certain period as they await its appreciation. The turnaround period occurs within a pre-determined time-frame. This can be a day, week, month or quarter. Day trading takes the shortest time frame. This can be further broken down to hours and minutes or time of day.
Some of the top questions asked include: When is the best time of the week to purchase stocks? Or when is the best time to sell off your stocks? Best month to buy or unload stocks? This article will offer some guidelines on how to prioritize your trading decisions according to daily, weekly and monthly trends.
Best time to buy or sell stocks
In the morning, the market prices and volumes go wild. Since the previous closing bell, there will be new information on market changes directly impacting the investment climate during the opening hours. This brings about unprecedented price volatility. The skilled traders are able to identify the right patterns and realize a quick profit. The unskilled traders can suffer significant loses when trading during sessions of high volatility.
Early Trading
The seasoned traders utilize the first 15 minutes after the opening bell – which is regarded as prime time. This period produces some of the biggest tradings of the day. 9:30 to 10:30 AM has considered best for day trading as big moves happen within a short period of time. It can extend to 11:30 AM. Most professional traders avoid trading past this hour as the volatility and volume will have abated. After the prime hour, trading moves are slower and involve less volume.
Mid-day Trading
Around mid-day, you can expect a calm and stable trading period. At this point, traders are out on lunch break. This is the period when people are anticipating news to be released. Most of the day’s news releases directly impact stock prices as people watch to see where the market will be headed for the rest of the day. As a beginner, this is a good time to place your trades as the prices are relatively stable. At this point, the action is slower and the returns more predictable.
Late Trading
In the final hours of trading, there is again in volatility and volume. Daily intra-stock market patterns reveal the final hours fairly resemble the first hours. You can expect sharp reversals and anticipation of huge moves. This period lasts from 3:00 to 4:00 PM as traders strive to close their positions.
Best Day to Buy Stocks during the Week
Monday turns out to the best recommended. For many years the stock market is expected to drop on Mondays – what is referred to as the Monday effect. This is attributed to the sheer volume of negative news that gets released during the weekends. Other indicators point to the gloomy news generated by investors before they head back to work. The effects are most evident during the early Monday trading hours.
Conclusion
Explained above by Options Animal are simply suggestions some exceptions and anomalies arise from market conditions or news events. The closets argument in favor of the undisputable rule is the high volatility during the first and last trading hours.