What’s the Best Time of Day to Buy Stocks?
What is the best time of day to buy stocks? This is a question that all investors must consider before diving into the stock market. Moreover, this has become a major point of analysis, or superstition, for day traders. Let’s take a deeper look behind the topic. Does the time of day really make a difference when investing in stocks?
Is There a Best Time of Day to Buy Stocks?
Investing in the stock market is built around data analysis. Investors can spend hours on end breaking down financial reports, such as quarterly earnings and projections. In addition, traders will scour the internet in search of news reports and press releases that help them make more informed decisions when investing in companies.
Overall, you want to have as much information as possible. This gives you the ability to find stocks with upside potential.
So, what is the best time of day to buy stocks? In general, the first two hours of trading each day are considered the best. For the New York Stock Exchange (NYSE), this is between 9:30 a.m. EST and 11:30 a.m. EST.
The NYSE opens at 9:30 am EST and closes at 4:00 p.m. EST. Pre-market trading typically begins at 8:00 a.m. EST. However, it’s been known to start as early as 4:00 a.m. EST. After-market trading begins at the closing bell and lasts until 8:00 p.m. EST each night. The stock market is also closed for specific holidays.
Market Movement Insight
Why are the first two hours of trading considered best? This is because, in general, it offers the most market movement in a short period of time.
The market can move quickly at the start of trading. And investors are using this information to their advantage each and every day.
In fact, most investors have a pattern to their trading habits. Some will make all of their trades within the first 30 minutes of the day. Others will buy early and sell late. Everyone has their own strategy. But many investors will create a plan and stick to it.
Therefore, what’s the best time of day to buy stocks? Frankly, it depends on a lot of different factors. This includes your specific strategy and the type of stocks or securities you wish to invest in.
Take the “10 a.m. rule” for example. This is a common strategy in which investors will wait until after 10:00 a.m. to buy stocks and options. They will then sell once the stock or option reaches new highs for the day. However, they will also put a stop-loss in place to protect themselves.
This is just one of many different investment strategies that focuses on timing. And these strategies evolve as the market shifts.
It’s important to consider market volatility when investing in stocks. Volatility is measure of a security’s price change over time.
If the stock price stays within a relatively stable range, it has a low volatility. If the stock price is moving more erratically, it has a high volatility.
And high volatility is more unpredictable. This means the stock price can be jumping from new highs to new lows in a short amount of time.
Specifically, market volatility is a way for investors to measure the amount of risk a stock carries. Next, they have to determine if that risk is worth the investment.
Best Time of Day to Buy Stocks
Investing in the stock market can be a great way to create passive income in your life. Yet, you will want to build a balanced portfolio that weighs the risks and rewards.
For more specific stock analysis, sign up for the Trade of the Day e-letter below. This daily newsletter provides stock tips and trends from some of Wall Street’s most experienced investors.
What is the best time of day to buy stocks? The first two hours of trading is the common standard. But you will find the best time for you by gaining more experience trading on the stock market.