The perfect time to invest in stocks is an extensively researched strategy that many stock traders bank on for success. Being privy to the best time to buy stocks throughout the trading day can be beneficial to profitability. Many investors rely on short-term price movements for accelerating profits.
Currently, the top 10 percent of investors nearly own 90 percent of the stocks, which is definitely not a good sign. But it is an extraordinary progress from the stock market crash of 1929, that spurred the Great Depression after glissading down 80 percent. Even the mega bull market of the 1950s could not erase the dramatic crash that scarred an entire generation. By the 1980s, not many households were interested in stocks, given that earning double-digit yields with bonds and money-market funds poised a better opportunity. Only 19 percent of households held a stake in the stock market.
It was only the great bull market of the 1990s that swiveled the entire narrative around the ideal timing for stock trading. The quantum of investors in the stock market surged up to 60 percent by 2000. But like the Moon’s phases of waxing and waning, the stock market boom stagnated after the Great Financial Crisis of 2008 and the dot-com blow-up, pivoting the muted market in the wrong direction.
Investors pulled away their equities and interests following the 2008 crash even with the onset of a new bull market underway. It wasn’t until the pandemic boom that stocks were chock-full of cash flow. If the market prices are low, it is considered the perfect timing for stock market investments – a good time to buy stocks is during a bear market when prices are down.
The Best Time To Buy Stocks: Time Of The Day
Based on the market sentiment, stock prices are quite volatile and fluctuate throughout the trading day. If the market chances upon unfavorable news, investors quickly offload that particular stock to limit their losses. Similarly, positive reports rally the stock’s prices which boosts the investors’ demands swiftly. There are tricks to every trade – and here are a few times of the trading day that seasoned traders believe is the best time to buy stocks.
The conventional trading hours of the stock market are between 9.30 AM and 4 PM. However, the economy is not bound to any such timing for stock purchases as important market shifts can take place at any time. This aspect has paved the path for advancements in electronic trading encouraging stock markets to make trading beyond regular hours, permissible.
Pre-Market Trading Hours
Pre-market trading hours usually take place between 8 AM and 9.30 AM ET on weekdays while many traders can access NYSE and NASDAQ pre-open sessions as early as 4 AM ET. The TSX does not offer this. The extended market trading hours have their benefits and risks.
The benefits include having a look at the volatility of the market and utilizing the time to quickly take action on business news or changes in the overseas market.
The Stock Market Open
When the regular trading day begins with the opening bell, stock prices quintessentially forego dramatic surges and blow immediately. Owing to 2 main reasons – overnight news and morning headlines, trades are driven by big gains or losses in stock prices.
Some would agree that this is the best time to buy stocks and the ideal timing for stock trading as the price-shifting news is old by the time the market opens. The first few minutes after the market opens is considered a good time to invest in stocks.
An upshot – early market trading till 11 AM is an ideal moment for stock purchases.
Midday Hours
The morning mayhem stabilizes by the afternoon and business news released in the afternoon or midday seldom creates any huge volatility after the market opens. The trading volume is low and cannot drive strong price movements and profit potential. This stability is not considered the best time to buy stocks.
After-Hours Closing
As the name suggests, after-hours trading takes place after the stock market closes. On the TSX, the post-trading hours run from 4.15 PM to 5 PM ET while other US stock markets engage in after-hours trading between 4 PM and 8 PM.
With similar benefits as pre-market trading hours, it is essential to even know the risks of not trading in the open market. The risks include liquidity of a security, volatility of price swings, the spread of differences in pricing with lower liquidity and higher volatility and the availability of orders where not all stocks are available to trade during the extended hours.
Perfect Time To Invest In Stocks: Best Day Of The Week
Many investors consider that between the closing bell on Friday and the opening bell on Monday, many fluctuations can take place that can fuel the pre-market trading on the first day of the week.
“The long span between trading opportunities and pent-up demand since the previous Friday has already been privy to news that can affect certain stocks or industries.”
On weekdays, only a few hours’ worth of news affects stock prices. Seasoned stock traders often view Monday as the best day of the week for the ideal moment to buy and sell stocks.
Many investors also believe in scoring a bargain at the right moment of ‘buying the dip’ – when inexperienced investors fumble to sell stocks that are slipping due to a market sentiment or news, seasoned traders scoop up the shares.
To conclude, while there may be many better times to buy stocks, experienced investors stick by a long-term buy-and-hold strategy and adhere to market timing strategies to know the best time to buy stocks. It is always wise to consult financial advisors to make an informed decision about stock trading based on your goals, risk tolerance and time horizon.
