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What is the Best Time of Day to Buy Stocks?

Jason BondJason Bond ·

Whether you’re looking into investing in the stock market for the first time or you’re trying to expand your portfolio, you may be wondering when the best time to trade stocks may be to make the most of your money. Understanding the best day of the week to buy stocks, as well as the best time of day to buy stocks can help you improve the way you trade and increase your chances of making high profits.

Looking at the market history is one way to assess the best day to buy stocks, as this allows you to identify patterns. You can also review the times of day in which the market is more volatile to figure out when you can invest. As you look at some of the factors that impact the success rates of more experienced traders, you can start to figure out the best time of the week to buy stocks and earn profits.

  • When analyzing the markets, you can look at the best times of each day, days of the week, days of the month, and even months of each year to buy and sell stocks.
  • The opening and closing hours of each day tend to be the most volatile.
  • The beginning of the year isn’t always the best time to trade, as most people believe they should focus on the middle of the year and then the end of the year, when investors may pull out for tax purposes.

Best Time to Day Trade

Looking for the best time of the day to buy stocks is an important part of developing your own trading strategy. If you aren’t as experienced with buying and selling, it’s best to avoid getting involved in the market within the first few hours of it opening as this is the time of day when it is the most volatile. The volatility is mainly due to geopolitical events, corporate news releases, and other factors that cause the markets to shift overnight. More experienced traders can often recognize which of these factors are simply market noise.

Although the risk of volatility is high, many believe that the best time to day trade is actually within the first 15-30 minutes of the market opening for the day. Most of the biggest trades of each day occur during this period, often due to the high interest in companies that has been raised by the events that took place overnight.

If you don’t want to take the risk of buying during this time due to inexperience or other concerns, the best time of day to buy stocks is around 11:30 a.m. The prices become more stable, the volatility reaches a peak, and most of the major trades that are the result of the overnight news and updates have taken place.

If you choose to buy and sell during this time of the day, it’s best to wrap up your trading for the day by 3:00 p.m. Between 3:00 and 4:00 p.m., the trading volume increases in most major markets, resulting in a higher level of volatility once again. Many traders with open positions will work to close them by 4:00 p.m. so they don’t leave anything open during the no-trade hours as this removes some of their control over their investments and the events that might cause shifts in the market overnight. Waiting too long to buy and sell in a day can cause you to get caught in a momentum that is more difficult to predict.

Best Day of the Week to Trade Stocks

As you get started, it’s helpful to identify the best day to buy and sell stocks. The main markets are open five days a week for trading, so you could ask, should I buy stocks on Monday or Friday? Or perhaps on the days in the middle of the week? According to many experts, the “weekend effect” is in full force in the stock market, which means the best day to buy is Monday.

The theory behind this belief is that after the weekend, when negative news tends to spread through investors, markets tend to drop to somewhat lower levels. As the new week begins, the probability for the numbers to decrease is higher. Therefore, it makes sense to consider purchasing stocks on Mondays, when you could potentially buy lower and watch the value of what you bought go up as the week goes on.

Although historical data can confirm that Mondays are good days to buy stocks, the market isn’t always as sensible as the fluctuations suggest. Therefore, you may still invest in a stock that doesn’t increase in value right away or even at all. Learning how to bounce back from potentially bad trades is part of becoming a more seasoned stock trader as well.

When it comes to getting rid of your stocks, the best day to sell stock is Friday. During the course of the week, the markets often experience upward trends that will peak on the final weekday, before they close for the weekend. If you notice that the market in which you are trading isn’t experiencing any type of upward swing or is even trending downward, you may want to hold off on selling stocks until they are more valuable again.

Of course, there is no guarantee that the value will go up, so it’s up to you when you want to sell. In some cases, it may not benefit you to hold off until the end of the week. However, in most cases, the best day of the week to sell stock is generally Friday.

Best Day of the Month to Buy Stocks

Along with evaluating the days of the week that tend to be the best for buying and selling stocks, you may also want to look at the best days of the month to invest. In the middle of the month, the prices of stocks tend to be lower before they begin an upward trend that commonly occurs at the end of the month. Fund managers can flow more money into the markets toward the end of the month, so the overall value is often higher at this time of each month.

One strategy is to focus on purchasing stocks between the 10th and 15th days of the month, with a plan to sell those stocks before the month ends. Doing so allows you to capitalize on price movements that occur every 30 days or so while capturing the momentum of the shifts to gain more significant returns.

Some experienced traders look at the times of the year that offer the potential for the highest returns, rather than looking at each week or month on its own. Most traders know about the concept of selling in May and going away, but if you haven’t heard of this strategy, consider that historical data shows that returns are often higher toward the end of the first half of each year. This upward trend may continue into the summer months, but the markets generally go down at least somewhat as the fall begins.

After September ends, you may see an increase in values between October and December. The idea behind this common trend is that investors often pull back a bit on what they buy and sell for tax purposes. When investors become more experienced in the markets, they often look for seasonal market patterns to plan out what they want to do on an annual basis.

Stock of the Day

As you develop your trading strategy and determine when you want to buy and sell, you may also be looking for the best stock of the day to buy. It’s helpful to set up alerts that will inform you of potentially leading stocks that could be entering a buy zone. You can also find information about the traits to look for in a stock that could offer high yields and is worth investing in as your stock of the day. Some of these stocks may be in the tech sector, as this is an area that tends to go up and down very quickly on a daily basis.

Using the resources available to you makes it easier to get into the stock market and start investing. Many people review news updates from the companies that are believed to be up and coming, while others focus on more reliable companies that come with less risk. Your overall strategy is up to you and how you want to invest, although using tools to track trends and monitor market conditions should always be part of your trading plan.

At Raging Bull, we offer a variety of tools and resources that can help you become a more experienced and confident investor. You can take advantage of our free e-books or even sign up for a webinar led by one of our expert trainers. Learn more about trading, the best times of day to buy and sell stocks, and how to develop a time-based strategy for your own portfolio by visiting Raging Bull and signing up for the resources you want today.

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