When is the best time to trade stocks? Are there any special rules about when a person should buy or sell shares?
It is a popular question among those who are learning to trade.
Many new traders make the mistake of overtrading and don’t realize that there are certain times of day to trade that are better than others.
In fact, certain hours can provide the greatest opportunity to trade stocks.
So, it is very important for traders to know when is the right time to trade stocks.
What time is the stock market open?
Stock market trading hours vary by exchange and geographic location.
Often when people talk about the stock market, they are referring to US exchanges like the NYSE or NASDAQ which are open from 9:30 a.m. to 4 p.m.
In Indonesia, this is equivalent to 21.30 WIB until 04.00 WIB.
Most US exchanges do not close for lunch, but there is usually less trading in the middle of the day.
Most of the liquidity for the US session is found at the opening and closing bells.
The US session is shorter than the UK market hours totaling just 6 hours 30 minutes.
Shorter trading windows lead to less volatility, as more news occurs when the market closes.
While the opening hours of Asian stock markets fall into the early shift of global market trading.
In many Asian countries, lunch breaks are common practice so it is important to know when trading will stop and restart.
There is usually less liquidity in the middle of the day, as most of the volume exits at the beginning and end of the day.
In some other Asian countries such as India and South Korea lunch breaks are prohibited to encourage more market activity.
Most Asian trading hours are only between 4 hours and 6 and a half hours.
This shorter trading session saw much less activity than other global sessions.
When is the best time to trade stocks?
Trading during the first one to two hours when the stock market is open each day is the best time for professional traders.
However, it should be noted that the first hours after the market opens tend to be the most volatile, providing the greatest opportunities and potentially the most risk.
Day traders usually during the first 15 minutes after the market opens. This is good advice if you are just starting out trading stocks.
These timeframes usually provide the largest trades in the initial trend.
In addition, Monday afternoon is also a good time for trading.
Historically, the market tends to drop at the start of the week, especially around the middle of the month.
Because of this, many experts recommend selling on the Friday before the Monday Effect decline occurs.
More specifically if that Friday is the first day of the new moon or before a three-day weekend.
Likewise, prices tend to fall in September and then rise again a month later.
October is generally a positive overall trend, and prices often rise again in January, especially for value-added and small-cap stocks.
When is the wrong time to trade stocks?
Trading in the middle of the day, during the lunch break is a bad time to trade stocks.
This is the time when volatility and volume decrease.
When this happens, the movements and patterns will be slower to play with less volume.
Midday is the quietest and most stable time.
After the morning news releases, the market responds, and traders wait to see where the market will go for the rest of the day.
Will the trend be sideways? What about the trend to the downside? Will the trend be up?
These are times that require patience and are not appropriate for day traders.
Remember that the best time of day to trade stocks is the morning unless you like it slow and steady.
However, trading during the day is like “boiling water but never boiling”. The trend is moving very slowly.
Of course, every trader has certain favorite times to trade.
What is above is the result of analysis of data showing market time patterns.
This then generates opportunities that stock traders can take advantage of.
However, keep watching the market and look for patterns that suit your trading style. Don’t just stick to a market pattern.