Many people do not prefer stocks for long-term investment plans. Therefore, they look forward to a turnaround as soon as possible. An investment plan like this comes with pre-determined tenure, which might range from days, a month, a week, or a quarter. Among all these, day trading remains the shortest.
If you are new to investing, you might not be aware of the fact that time plays a crucial role in the trade of stocks. Here, in this guide, we will discuss the best time of the month, week, or day to make trading decisions.
Market prices and volumes might go wild in the morning. The early 15 minutes of the opening hours are best for the day traders. It is a prime time offering some largest trades for the day. If you want to make a big move, try investing your hard-earned money during this short period of time. By the time the clock strikes 11:30 am, most of the professional traders put an end to their trading day. This is because volume and volatility decrease by then.
Start trading around 8:30 am, and when the time says 10:30 am, it’s time to stop. You might extend it for another hour, but it totally depends upon the opportunities provided by the market. Most of the trading days have a stable and calmest environment during the middle of the day. This is because, during that time, everyone is waiting for the arrival of further news. Since actions are slower and prices are stable during this time, it is a good time for beginners to trade.
And again, during the ending hours of the day, volume and volatility rise. Market patterns have shown that the last hours can be as sharp as the beginning hours. The few several minutes toward the end of the day often offer the biggest moves for the investors. From 3:00 pm, day traders close out for an hour, hoping that momentum will take place the next day.
Best Time to Buy Stock
People believe that some particular days in a week offer better returns as compared to others, in the long run. Though there’s no strong evidence for that. People still believe that Monday, the first of the week is the best time, which is also known as Monday Effect. Over a decade, people have observed that the market drops on Mondays, on average. However, others have pointed out the gloomy mood of the investors for having to work again. Therefore, if you want to buy stocks, do it on the first day of the week as you’ll get it at a very fair price.
Best Time to Sell Stock
Sell the stocks you’ve bought on Monday before the weekends, i.e., on Friday. Don’t wait until Monday as the price will sharply drop by then. If you are interested in short-term trading, then buy it on Monday and sell it on Friday of that particular week. When Friday comes, there’s a sharp rise in the value of stocks, therefore, making it favorable for people who want to sell their stocks.
Markets offer strong returns if one buys stock during the summer or around the end of the year. The month that an investor would want to avoid is September as it’s a very down month. Historically, the best returns are witnessed during the month of October. Therefore, traders must get into the stock market in September when the prices are low and get ready to receive better returns in October when prices receive a boost.
As per the “Stocks for the Long Run,” there’s a thing called the January Effect. At the beginning of a year, investors push prices up of value stocks and small-cap. This signifies that December is favorable for buying value or small-cap stocks and waiting a month for the price to rise again.
Best Day of the Month
Though there’s not any fixed day of a month that’s favorable for selling or buying, still the end of a month offers better returns than the rest of the days. However, the stock prices tumble during the middle of the month. A trade might avail of this opportunity and buy stock in between 10th and 15th of a month. And when the prices rise around the end of the month, the stocks can be sold for better returns.
One cannot completely rely on the information mentioned above, as they won’t always be cent percent true. Anomalies and exceptions are there, depending on the fluctuating market conditions and news events. Though the closing and opening hours of the day are mostly favorable, several people make profits even during off-times. Hence, there’s no evidence that a particular day or week is the best for trading. Everything depends upon the situation of the market.