Different from traditional investment, trading has a short-term focus. Traders buy stock for a quick turnaround. It usually within a pre-determined period, such as a few days, a week or a month. Therefore, it is important for you to know the best day to buy and sell stock in order to gain the highest profit.
The best day of the week to buy stock
Some traders believe that there is a particular day in which it offers better returns than the others. Even without strong evidence for such market-wide effect, many still hold onto that belief.
According to these people, the first day of the week of the work-week, Monday, is the best. They usually call it the Monday effect.
However, in decades, there is a tendency for the stock market to drop on Mondays. According to Investopedia, Mondays on average have marked negative returns for the S&P 500 in 2018, even with a very small effect.
Some studies put the blame on a significant amount of bad news that is released during the weekend. While some others point to investors’ gloomy mood for having to get back to work. The later, is proven by the stock market drop usually happens in the early hours of Monday.
Even so, if you plan to buy stocks, Monday is still the best day as it gives you bigger chances to hit some bargains than the other days.
Also read: Stock Trading 101: The Basics of Shorting Stocks
Best day of the week to sell stock
If the first day of the work-week is the best day to buy stocks, then the best day to sell it is on the last day of the work-week. That is on Friday.
If you want to try short selling, then Friday may be the best day to take a short position. Later, on Monday, you can cover your short.
In the U.S., Fridays are even better as it is the eve of weekends. Consequently, traders’ positive feelings prior to a long holiday. Thus, the stock markets tend to rise ahead of these observed holidays.
