I recently got asked this question by one of our Freedom Trader Blueprint students;
Is there a particular time you should place your trade or investment during the day?
The simple answer is yes there is.
The Best Time To Place Trades During The Day
The best time that I have found over the years whether for investing or trading, is generally towards the last 10-15 minutes of the market, and if you can, even the last 1-2 minutes right before the market closes.
Why is this?
A few reasons…
- Market liquidity which is the volume of buys and sell, you’ll find that the last 10-15 minutes of the market being open is when buyers and sellers (especially institutions) are most active with taking or closing off positions
- These buyers and sellers includemany day traders and institutions who don’t want to take on board overnight risk and want to make sure they close off their books for the day.
- For the two above reasons, you get as close as possible to the true price of where the market wants the stock to be.
The other best time is generally after the first 30-60 minutes of the market open, to allow the market to settle down abit especially if there has been a major market-related development. This period also has quite a fair bit of liquidity.
The Best Time To Avoid Placing Trades
On a further note, the best time to avoid is usually during lunchtime, because that is when there is the lowest volume of stocks to tradechanging hands and hence you may not get the true and fair price you want.
So just to quickly summarise:
If you’re looking for the best time to either buy or sell a stock during the trading day it is;
- During the last 10-15 minutes before market close
- Or about an hour after the market opens
- And lastly to avoid the lunchtimes as it’s generally the quietest time of the market day of you want to get the best price possible for either the buy or the sale.
It is important to be aware of the best time to place your trades during the day, so as to ensure you get the most accurate price for what you are looking to buy or sell. The times I have listed above should help give you a good idea of when is the best time to make your move in the market.
Terry
FAQs
Stock prices tend to fall in the middle of the month. So a trader might benefit from timing stock buys near a month's midpoint—the 10th to the 15th, for example. The best day to sell stocks would probably be within the five days around the turn of the month.
What is the optimal time to buy and sell stock? ›
With that, the best time of the day, in terms of price action, is usually in the morning, in the hours immediately after the market opens up until around 11:30 a.m. ET, or so. That's generally when most trading happens, leading to the biggest price fluctuations and chances for investors to take advantage.
What is the best buying time in stock market? ›
Best time of day to buy stocks -
The Indian stock market operates from 9:30AM to 3:15PM. Intraday traders who buy and sell stocks within a given day most often consider 9:30AM to 10:30AM an ideal time to trade.
When to buy stock and when to sell? ›
The best time to buy stocks is when the share prices of a given stock are at a low. There is always a chance that they will drop even further, but buying at a low price is significantly safer than buying at a high price where the price of the stock is unlikely to climb much higher.
What is the best time of day to buy and sell? ›
The best time of day to buy and sell shares is usually thought to be the first couple of hours of the market opening. The reason for this is that all significant market news for the day is factored into the stock price first thing in the morning.
What is the 3-5-7 rule in trading? ›
The 3–5–7 rule in trading is a risk management principle that suggests allocating a certain percentage of your trading capital to different trades based on their risk levels. Here's how it typically works: 3% Rule: This suggests risking no more than 3% of your trading capital on any single trade.
What is the 11am rule in trading? ›
It is not a hard and fast rule, but rather a guideline that has been observed by many traders over the years. The logic behind this rule is that if the market has not reversed by 11 am EST, it is less likely to experience a significant trend reversal during the remainder of the trading day.
What is the best month to sell stocks? ›
The best months for the stock market are April, November, and December; the worst months are June, August, and September.
What is the 10 am rule in stocks? ›
Some traders follow something called the "10 a.m. rule." The stock market opens for trading at 9:30 a.m., and the time between 9:30 a.m. and 10 a.m. often has significant trading volume. Traders that follow the 10 a.m. rule think a stock's price trajectory is relatively set for the day by the end of that half-hour.
What time of day are stocks cheapest? ›
The best time of day to buy and sell shares is usually thought to be the first couple of hours of the market opening. The reason for this is that all significant market news for the day is factored into the stock price first thing in the morning.
Many traders and investors believe Friday is the best day to sell stocks. This belief comes from observations of the aforementioned Friday Effect, where stocks often enjoy a slight bump in prices as the trading week comes to a close.
What is the best day of the week to buy stocks? ›
Mondays: A Day of Adjustment
Historically, Mondays have often been considered a good day to buy stocks, primarily due to the 'Weekend Effect' or 'Monday Effect'. This theory suggests that stock prices tend to drop on Mondays due to negative news released over the weekend.
What is the 3 day rule in stocks? ›
The 3-Day Rule in stock trading refers to the settlement rule that requires the finalization of a transaction within three business days after the trade date. This rule impacts how payments and orders are processed, requiring traders to have funds or credit in their accounts to cover purchases by the settlement date.
What month is historically the worst month for stocks? ›
The month of September has been, on average, the worst month for the stock market going back more than a century.
What time of day are stocks highest? ›
Market volume and prices can and do go wild first thing in the morning, precisely the first 15 minutes. People are making trades based on the news. Power hour between 3:00 pm and 4:00 pm is also a very popular time. The best time to buy stocks is 9:30 am to 11:00 am EST because the market is most liquid.
What day of the week are stocks lowest? ›
Stock prices fall on Mondays, following a rise on the previous trading day (usually Friday). This timing translates to a recurrent low or negative average return from Friday to Monday in the stock market.
What is the 10 am rule in stock trading? ›
Some traders follow something called the "10 a.m. rule." The stock market opens for trading at 9:30 a.m., and the time between 9:30 a.m. and 10 a.m. often has significant trading volume. Traders that follow the 10 a.m. rule think a stock's price trajectory is relatively set for the day by the end of that half-hour.
What is the 30 day rule buying stocks? ›
Q: How does the wash sale rule work? If you sell a security at a loss and buy the same or a substantially identical security within 30 calendar days before or after the sale, you won't be able to take a loss for that security on your current-year tax return.
When should I sell my stock for profit? ›
How long should you hold? Here's a specific rule to help boost your prospects for long-term stock investing success: Once your stock has broken out, take most of your profits when they reach 20% to 25%. If market conditions are choppy and decent gains are hard to come by, then you could exit the entire position.
