Best Time To Buy Stocks During The Day: The stock market allows traders to make money by purchasing the shares of publicly-held companies. These types of investors can make significantly high profits, provided they make sound buy, sell, or trade decisions.
With the help of opening an online broking account, an investor can make high profits if they trade the right stocks. More often than not, investments in stocks should be made when their prices are low.
While no one can decide the bottom of the stock prices, it is better to invest in them instead of the stocks having high prices which might not rise further. The latter can see a decline in the price which can lead to a loss for investors looking to sell said shares.
Therefore, shares that are bought at a low price can yield higher profits. The time of the day to purchase stocks is crucial. Day trading refers to the shortest time frame since trades are broken down into hours, minutes, and even seconds.
The time of the day when trade is made can be considered an important factor for traders while doing day trading. The best time to buy stocks during the day is more useful for intraday traders rather than for long-term investors.
While some day traders believe that some specific days provide systematically better returns in comparison to others, in the long run, not much evidence has been seen for such an effect.
In this article, the focus will be on identifying the best time to buy stocks during the day so that day traders can gain as much as possible. Read on!
Change Of Sentiments During Trading Hours
The first hour of the trading day in the morning can see market volumes and prices go wild. Opening hours are the hours when the market takes into consideration all events and news releases about the economy or a company since the closing bell of the previous day.
As a result, there can be significant price volatility. A skilled and seasoned trader can recognize an appropriate pattern to make quick profits. However, a less skilled trader or an amateur can incur significant losses.
So, if you are a new entrant in the trading world, try and avoid trading during volatile hours, or within the first hour. On the contrary, seasoned day traders can make huge profits in the initial hour following the opening bell.
For them, this is the time to offer the biggest trades on initial trends. Therefore, the best time to buy stocks during the day for a seasoned trader is the initial hour after the opening bell.
As the day progresses, the middle of the day is supposed to be the calmest and most stable period of the trading day. This is because most of the traders wait for further news during this time.
Since most of the day’s biggest news releases have been announced, most traders watch and try to monitor the direction of the market for the remainder of the day.
Since the prices are stable during this period, it is a good time for amateur traders to place their trades, as action will be slower and returns will be predictable.
Finally, in the last hour of any trading day, volatility and volume tend to rise sharply again. Therefore, if you are a new entrant in the trading world, make sure that you close your positions before 2:30 PM.
Otherwise, you might get stuck in a momentum that is very difficult to predict. Most of the intraday stock market patterns exhibit that the last hour can be similar to the first one i.e., solid reversals and significant moves.
This is particularly true for the last several minutes of trading. During the last hour, day traders often try to close out their positions, or there can be some who attempt to join a late-day rally.
The second category of traders are ones who hope that momentum will be carried forward into the next trading day.
Best Time To Buy Stocks During The Day Or Make Profits
It can be a tedious task to watch the market throughout the trading hours looking for an opportunity to buy or sell. Continuously looking at charts and graphs can result in mental fatigue and confusion.
Moreover, volatility significantly falls after the initial 90 minutes and the volume in the stocks might also drop. Experienced and renowned traders try to manipulate rates and turn the graphs around.
Therefore, a beginner should avoid placing the trade during this time slot. Taking these factors into consideration, 9:30 am – 10:30 am is the best time to buy stocks during the day.
This one hour has historically proved to be the most dynamic and active in terms of price movements. Therefore, this hour paves the way for significant profit opportunities in comparison to the rest of the trading session.
The stock market opens for trading at 9:15 am. In the first 15 minutes, the market responds to the previous day’s news while experienced traders wait to make their move.
Therefore, the first 15-minute slot should be avoided. There are traders who prefer more time to make their observations to arrive at an informed conclusion. For them, it is advised to stretch trading time to a maximum of 11:00 am.
Also Read: How Are Prices Of Stocks Determined? – Factors Affecting Stock Prices!
In Closing
Estimating the best time to buy stocks during the day may be important, but in reality, a trader’s decision should not be solely based on this factor. Therefore, this factor cannot be the only decisive factor in whether an investment will end up making huge profits.
Suggestions such as the best time to buy stocks during the day, the best day of the week, etc. are generalizations. There can be some exceptions and anomalies, depending upon news and changing dynamics of the stock markets.
However, historical evidence suggests that any sort of pattern in market timing where a trader is able to generate significantly high returns is generally short-lived. This is because when these types of opportunities arise, they get arbitraged away.
Traders learn about these patterns which make the market efficient. However, some traders believe that estimating the best time to buy stocks during the day can help a trader and save him/her from the noise of the market.
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