Short-term price movements play a vital role for professional traders looking to turn a profit from stocks. Knowing the best times to bet on stocks during the whole trading session can help determine how you will approach the market effectively for the day.
At the Open
The stock market opens at 9:30 am eastern standard time (EST), which is also the start of the trading session in the US stock market.
Stock prices are usually making strong moves at that time due to different reasons, with the most common one being news reports released overnight and in the morning. Overnight news has a strong impact on after-hour trades, which can lead to an excellent or poor performance of the stock.
Experienced traders know well that opening hours are one of the best times to participate in the stock market.
Moreover, they are aware that the news moving stock prices has lost its influence by the time the market opens. That allows them to buy and sell during the first minutes and hours, knowing that stocks often trade on stable grounds in the middle of the day or afternoon hours.
Therefore, if you want to turn a profit on stock price volatility, trading between 9:30 am to 10:30 am or, sometimes, up to 11:30 am are perhaps the most suitable times to enter the stock market.
In the Afternoon
Many traders find the midday trading hours to be not the ideal time to buy and sell stocks as price movements and trading volume typically stabilize by the afternoon.
That’s because corporate news reports released during that time of the day don’t often generate volatility as strong as the one created at the open.
With the lack of trading volume and news that can drive stock prices, trading around 11:30 am and 2 pm doesn’t usually provide market players a great deal of profit opportunity.
At the Close
The stock market’s final hours can offer traders the profit potential they need, as there is plenty of activity taking place at the close.
From traders seeking to make money on price rallies at late hours to sellers looking to close their positions, participating from 3 pm to 4 pm will allow you to see sufficient price movements and trading volume.
The closing hours also tend to have novice traders, who based their trading decisions on the day’s news reports, reentering the stock market.
However, note that this type of timing is usually considered poor and may carry more risks than benefits, as the decision to return to the market at this time could be because of news trends rather than strategy.
The situation also becomes disadvantageous for new traders as experienced traders can benefit from their poor timing.
Similar to early trading, the time between 3 pm to 4 pm is the recommended hours to buy and sell stocks during the market close since the price movements and trading volume at these times are reaching high levels, and first-time traders are making last-minute trades.