Best Time(s) of Day, Week, and Month to Trade Stocks

When is the best time to buy stocks? This is one question every investor asks. Truth is, Understanding when best to invest your money does like Fifty percent of the work. In this article, I’m going to show you what time is the best to buy stocks and grow them. 

Why do you need to understand the market before you invest?

There are quite a number of reasons why you should understand the market before you put in your money. The major reason is that it will help you not to lose your money. Also, it will help you maximize your profit.

Is now a good time to buy stocks?

The best time to buy or sell a stock is largely determined by your own market research and company research.

With that in mind, trading volume and volatility are generally higher in the first and last hours of the trading session than the rest of the day. If an experienced trader accurately recognizes a particular pattern of price behavior in a stock, they can take advantage of the increased volatility to enter the market and profit

Markets and individual stocks are affected by business and geopolitical news at different times, so keep an eye out for common economic data release times that can lead to increased volatility.

While some traders believe that certain days of the week — or even specific months — are better for trading on one side of the market or the other, there is little scientific evidence to back this up, especially as such timing patterns become more widely known. Many traders continue to believe that trading stocks at certain times are more profitable.

When is the best time to buy stocks during the day?

Let’s quickly look at some of the days you may consider buying and selling your stocks. Research over time has shown these days to work.

 When is the best time to sell stocks?

Best time of day: Right before the end of the trading session, between 3 and 4 p.m. EST.

The best time to sell a U.S. stock, according to most traders, is just before the last hour of the NYSE’s trading session, which runs from 3 p.m. to 4 p.m. EST. The rationale for selling during this time frame is that most stocks that have been actively trading all day may have already reached their high point and are thus poised to decline into the close.

The majority of relevant news on any given stock has already been released by the end of the trading day. This means that any impact the day’s news should have on the stock’s price has already been reflected in the market, so there should be no major price shocks.

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Another important factor in favor of selling stocks during the last hour of the trading day is that day traders must close out all open positions in order to avoid carrying trades overnight. As a result of day traders taking profits, stocks that have performed well during the session may begin to decline as the market closes.

If you believe you can correctly predict this profit-taking activity, you may be able to short such stocks ahead of the day traders and profit from the commonly observed decline by squaring your position closer to the market close.

The Best Day of the Week to Invest in Stocks

Monday is the best day of the week to buy stock.

According to a market theory known as the “Monday or weekend effect,” Monday is probably the best day of the week to buy stock. The Monday effect states that if the market was up on Friday, it will continue to rise on Monday.

Over the last decade, the Monday effect has largely vanished, and many traders now expect stocks to fall on Mondays in general, especially if negative relevant news was released the previous weekend.

This would make Monday purchases even more appealing because you might have a better chance of getting in at a good price, though you’ll probably want to wait until the expected Monday decline has occurred first.

When is the best time to sell stock?

Friday is the best day of the week to sell stock.

Friday is usually the best day of the week to sell a stock, especially if the Friday in question kicks off a longer-than-usual three-day weekend. Short-covering by traders to avoid paying interest on a short position over the weekend, as well as any optimism traders, may have for market-positive news over the weekend, cause stock markets to rally on Friday.

If you plan on shorting a stock or buying put options, Friday is probably the best day of the week to do so, though you’ll have to wait until after the expected short-covering rally to enter that position. Because stock markets may open at lower levels the following Monday, you can plan on covering your short position.

The Best Day of the Month to Invest in Stocks

The best time to buy stock is around the 10th or 15th of the month.

Because mutual and hedge funds make monthly adjustments to their stock portfolios at the beginning of the month, the best time to buy stock is in the middle of the month, around the 10th or 15th. Stock prices tend to fall in the middle of the month, which can be a good time to buy.

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Stocks with specific dates may also present buying opportunities. For example, a company’s earnings report, news of a stock split, or a potential takeover bid by another company could all present trading opportunities, and these opportunities are not limited to specific days of the week or months. Research when the company’s earnings are released, as well as any other news items that may affect the price of the stock you intend to buy, to better time your purchases.

The best time to sell stock is on the last day of the month. One of the days leading up to the month’s final trading day

One of the days leading up to the last trading day of the month is probably the best day to sell stock. Portfolio managers frequently use the week leading up to the end of the month to “dress up” their portfolios by purchasing more of the stocks that have performed well. As a result, near the month’s end, the prices of those high-performing stocks tend to rise even more.

“Drying up” a portfolio’s returns by marking upward trending stocks to market at the end of the month may only result in a paper gain for the portfolio manager. However, if you sell your stock at a higher price near the end of the month, you will have realized your profit on that position.

Best Online Brokers for Stock Purchases and Sales

As a trader or investor, the stockbroker you choose to partner with and execute your trades through can have a significant impact on your bottom line, so choose wisely. Benzinga has put together a table of the best online stock brokers so you can quickly compare them and choose the one that best suits your needs.


What is the best day of the month to invest?

There isn’t a single day of the month that is always the best time to buy or sell. Stocks, on the other hand, have a tendency to rise at the beginning of each month. This pattern is primarily due to monthly new money flows directed toward mutual funds.

Furthermore, fund managers try to make their balance sheets look nice at the end of each quarter by buying stocks that have performed well during that period. In the middle of the month, stock prices tend to fall.

As a result, timing stock purchases near the month’s midpoint—say, the 10th to the 15th—might be advantageous to a trader. The best time to sell stocks is probably within the five days surrounding the month’s turn.

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 Important considerations to bear in mind when investing

Here are some of the things you should consider before throw in your money into any investment.

Make a strategy

What is the purpose of your investment? What is your time frame? Is this a one-time investment, or do you intend to add to it on a regular basis? The answers to these questions can help you decide how to invest your money.

Consider the long term

A short-term drop in stock prices today will not have a significant impact on your long-term returns. It won’t have the same impact as missing out on a few of the market’s best days. And, if you buy stocks on a regular basis by dollar-cost averaging rather than hoarding cash, you’ll almost certainly do better than if you tried to time the market.

Recognize volatility

Every day, market values fluctuate. Some stocks are more volatile than others, such as growth stocks and value stocks. High-flying growth stocks that crash at the first sign of trouble aren’t for everyone. Choose stocks that fit your risk tolerance and valuation swings.

Diversify

Investing across market sectors can assist in mitigating market forces that only affect specific industries. Furthermore, by looking across stock market sectors, you will be able to find more investment opportunities in any market.

Expect to be wrong from time to time

You’re not going to pick winners every time if you’re an individual stock investor. That is yet another reason why it is critical to diversify your investments across multiple companies and industries. Then, if your investment thesis proves to be incorrect, it’s time to sell and put your money to work somewhere else.

Final Thoughts

Of course, these generalizations about the best time of day to trade stocks, the best day of the week to buy or sell stocks, and the best month to buy or sell stocks are just that. Depending on news events and changing market conditions, there are numerous exceptions and anomalies.

The closest thing to a hard-and-fast rule is that the first and last hours of a trading day are the busiest, with the most opportunities—but many traders profit during non-peak hours as well.

Nonetheless, academic evidence suggests that any market timing patterns that can consistently generate abnormal returns are generally short-lived, as these opportunities are quickly arbitraged away and markets become more efficient as traders and investors gain a better understanding of the patterns.

References

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