Like most business activities, specific times of the day and days of the week and allocated days in the month can make a difference in how successful your actions prove to be.
Unlike traditional business investment, trading has a quick turnaround, much more similar to gambling with online casinos. Traders are in it for gains made quickly, and that takes skill. Trading stocks is usually done in a predetermined time frame; depending on the stock, it can be a week, month, a quarter, or even as little as a few days. The timing is often subject to the type of stock sold; with so many things to think about, let’s start with day trading.
Day Trading Stocks and Futures
For example, as the name implies, day trading has the shortest time frame of all. Traders break down the options into hours and even minutes, depending on several factors. The first consideration is the time of day a trade is made.
Generally, the first and last hour of any trading day is the busiest, offering the most possibilities to make money. In contrast, the middle of the day tends to be the most stable period within trading days – even traders like a lunch break.
If day trading index futures such as the S&P 500, you can begin trading early in the pre-market at 8:30 am and then begin to taper off around 10:30 am. It’s possible with stocks to trade up to 11:30 am. Any trading after that is generally not worth considering.
Because the middle of the day is considered the most stable period of the trading day, it’s a good time for beginners to practice trading; as the action is slower, stock prices have been factored in; therefore, returns are more predictable. Many novice traders cut their teeth at this time of the day, some with better results than others.
Within the last hours of the trading day, the excitement starts again. Stock market patterns at this time have a lot in common with the morning trade. Traditionally from 3:00 to 4:00 pm, day traders try to close down their positions, or they may try joining a late-in-the-day rally hoping that the momentum will carry forward. For most traders, closing time is 4.30 leaving enough time for a swift half before the commute back to the stockbroker belt.
Monday is the Best Day To Buy Stock
Many stockbrokers would refute this statement saying Monday is a terrible trading day. The traditional ‘Monday Effect’ refers to the ideology that Monday stock returns follow those of the previous Friday, so ‘up’ on a Friday means ‘up’ on a Monday.
Recently, the ‘Monday Effect’ theory has been rejected. The ‘Monday Effect’ can fall foul as companies tend to release pessimistic forecasts on Friday night, which leads to a decline in market optimism over the weekend. Proving the point, buying on a Monday when the stock price is down is even more lucrative if a company has been subject to bad news while the markets are closed.
Friday is the Best Selling Day
If our interpretation is correct and Monday is the best day of the week to buy stocks, it follows that Friday must be the best day to sell stocks. Logically, selling before prices take a nosedive on Monday is good business. Especially if the Friday concerned is on the eve of three-day weekends or bank holiday, making money on these Fridays can be excellent.
Generally, before a long holiday weekend, positive feelings can see the stock market rise in celebration of time off. But what goes up will come down, and the Monday Effect may be more prevalent on a holiday weekend.
Hot Months Make Great Trading Months
Trading tends to have strong returns during the summer months. However, September is traditionally a down month, perhaps related to vacation times – lots of companies relocate their staff in September, ready for an increase in interest in October.
Other hot sales months are January and the end of December, although these rules can and do change with any turmoil in the marketplace. We’ve looked at stocks and futures now; let’s look at the foreign exchange markets (Forex).
Best Times to Trade the Forex Markets
Available trading time in the forex market covers 24 hours a day except for weekends—the market-driven by local sessions, four in particular. Sydney, Tokyo, London, and New York and is decentralized as a consequence.
Trading volume changes in pace from one session to another, though the most rigorous trading volume tends to occur when the New York and London sessions overlap at 4 pm London time. Savvy traders might jump from stocks and futures to forex in one day; while trading companies do this, individuals might find this back-breaking.
The foreign exchange market isn’t dominated by a single exchange but involves a global network of participation from brokers and markets worldwide. Trading hours for the forex market are based on when trading is open in each major participating country.
To summarise – Buy stocks and futures on a Monday between 8.30 am and 11.30 pm and sell on a Friday at 3.55 pm, jump over to forex at 4 pm and take the weekend off – let’s face it, after that, you might just need another day in bed.