Personal Finance Questions and Answers for Young Professionals

4 Responses to “What is the best time to trade?”

1. 
   sergik12 Says:
   January 24th, 2008 at 10:41 am

   To me trading in the morning does not make sense. Instructional investors wait until 2-3 o’clock to execute their trades. Most of the volume in the morning is considered dumb money. I would wait till the afternoon to take my positions. I think you saw that yesterday when the institutions helped the market recover before close.

   Reply

2. 
   Gabadoo Says:
   January 24th, 2008 at 1:16 pm

   At 9:30am, either the specialists on the exchange or the electronic book matches the limit and market on open buy orders to the limit and market on open sell orders, then determines an opening Bid and Offer. The first hour of trading in the morning sees the highest volume as a percentage of the whole and generally the highest volatility. Around 10:30am-11:00am you will generally see the initial revesal. This occurs as market makers who provide liquidity on the exchange will eventually exhaust all contra orders, then use their capital to reverse prices and make a profit. This lasts anywhere from 15-45 minutes depending on the strength of the market. By 11:30am the market begins to die down as traders across the world take lunch…literally. Volaitlity remains slow until sometime between 1:30 and 3:00 on average (highly dependant on the time of year summer or winter), and the last half hour of trading gets volatile again with the placing of market on close orders and imbalances resulting from them.
   In my opinion, if you want to trade when it is less volatile, trade during lunch. However, if you are buying a security, you should know the specific price or price range you like it at, and use a limit order to buy. If you do this, it won’t matter when you trade. When getting out of a trade and using a limit order, you have the best probability of getting filled in the first two hours of the day.

   Reply

3. 
   RomVay83 Says:
   February 16th, 2008 at 4:02 pm

   Don’t forget end-of-day trading. EOD is often where many stocks will experience EOD corrections where prices tend to level out. In other words, traders will either cash out on any gains made in the day (lowering the price) or buy up stocks on “sale” (increasing the price). The are numerous opportunities at EOD.

   Reply

4. 
   pbucelwicz Says:
   May 15th, 2008 at 3:15 pm

   Thanks People. That makes a lot of sense. Sounds like Definitely not in the morning or after hours. Between mid day and end of day.

   Does it really matter if you are investing for the long term though?

   Reply

Leave a Reply