As trading has short term focus, there is a pattern of when is the best time to buy or sell the stock. The pattern can be as specific as the time of the day.
Trading at this best time can generate you the highest profit. Therefore, it is important for you to learn the pattern and trade during that time.
The early hours of the day
Market volumes and prices can go wild in the first hour in the morning. The opening hours portrays the window where the market factors in the news from the previous closing bell releases.
That results in the price volatility. A skilled trader may have the ability to recognize the appropriate patterns during this period in order to make a quick profit. Yet, for a less skilled trader, trading at this period may bring you serious losses.
Thus, if you are a novice, you better avoid trading in these volatile hours, or at least stay away from it during the first hour.
However, if you are a seasoned day trader, then, the first 15 minutes is your prime time. It offers several biggest trades of the day on the initial trends. So, for them, the whole 9.30 – 10.30 AM ET is the best hours, which later extended to 11. 30, if they want another hour of trading.
Later than 11.30, the volatility and volume tend to decline, thus, many professionals often stop trading around that hour.
The middle hours of the days
The middle of the day is usually the calmest and the stable period of most trading days. It is usually the time when traders wait for the announcement of further news.
The day’s news releases are an essential factor in stock prices. Many traders use it to watch where the marker may be heading for the remaining time of the days.
For a beginner, this time is the best time to place trades as the actions are slower and the returns might be more predictable.
Also read: 3 Types of Stop Loss to Minimize Your Trading Risks
The last hours of the day
Volatility and volume increase again in the last hours of the trading day. The last several minutes of trading, in fact, can be the first sharp reversals and big moves.
From 3:00 to 4:00 PM, day traders are often trying to close out their positions. While some others may be attempting to join a late-day rally in the hope that the momentum will carry forward into the next trading day.
