The opening 9:30 a.m. to 10:30 a.m. Eastern time (ET) period is often one of the best hours of the day for day trading, offering the biggest moves in the shortest amount of time. A lot of professional day traders stop trading around 11:30 a.m. because that is when volatility and volume tend to taper off.
The best times to day trade
Day traders need liquidity and volatility, and the stock market offers those most frequently in the hours after it opens, from 9:30 a.m. to about noon ET, and then in the last hour of trading before the close at 4 p.m. ET.
It's a simple question with more answers than you'd think. Regular trading hours for the U.S. stock market, including the New York Stock Exchange (NYSE) and the Nasdaq Stock Market (Nasdaq), are 9:30 a.m. to 4 p.m., except stock market holidays.
3:00–4:00 p.m. While price trends can break either way in the opening hour, they tend to build consensus in the closing hour—barring big news during the trading day.
Because relatively few people actually trade after the market closes, orders tend to build up overnight, and in a rising market, that will produce an upward price surge when the market opens. But during extended declines, overnight sell orders may cause prices to plummet when the market opens.
The Nasdaq and other major stock exchanges have steadily augmented their trading hours to provide investors with more time to buy and sell securities. Electronic communication networks (ECNs) enable investors to trade stocks during aftermarket hours between 4:00 p.m. to 8:00 p.m.
First thing in the morning, market volumes and prices can go wild. The opening hours are when the market factors in all of the events and news releases since the previous closing bell, which contributes to price volatility.
And according to it, the best days for trading are Mondays. This is also known as “The Monday Effect” or “The Weekend Effect”. The Monday Effect – a theory suggesting that the returns of stocks and market movements on Monday are similar to those from the previous Friday.
The volatility of the market begins to decrease at around 11 or 11:30 AM. During this session, the volume is also inclined to reduce. Therefore, when trading at this time, you do not maximize your returns and often price action can be very choppy.
Stock prices fall on Mondays, following a rise on the previous trading day (usually Friday). This timing translates to a recurrent low or negative average return from Friday to Monday in the stock market.
The upshot: Like early market trading, the hour before market close from 3 p.m. to 4 p.m. ET is one of the best times to buy and sell stock because of significant price movements, higher trading volume and inexperienced investors placing last-minute trades.
Stock turnover is generally lower and price movements less pronounced on the last trading day of week. Companies with bad news to report often take advantage of this slowdown by making their announcements on Fridays.
The Monday effect has been attributed to the impact of short selling, the tendency of companies to release more negative news on a Friday night, and the decline in market optimism a number of traders experience over the weekend.
In short, the 3-day rule dictates that following a substantial drop in a stock's share price — typically high single digits or more in terms of percent change — investors should wait 3 days to buy.
After-hours trading is more volatile and riskier than trading during the exchange's regular hours because of fewer participants; as a result, trading volumes and liquidity may be lower than during regular hours.
For smaller companies, the market hours (post-open) are the best entry times to buy the stock. At this time, all the exchanges are quoting prices and traders have access to more shares. Traders hoping to make an intraday play can buy a stock they may want to close out at the end of the day.
The first hour of trading, beginning at 9:30 a.m. Eastern Time, is the most volatile of the day, with floods of orders based on overnight-night news and analysis. This creates large price swings in a short amount of time. While movement can seem erratic, trends or ranges will develop.
The closing price on a stock can tell you much about the near future. If a stock closes near the top of its range, this indicates that momentum could be upward for the next day.
If you sell a stock security too soon after purchasing it, you may commit a trading violation. The U.S. Securities and Exchange Commission (SEC) calls this violation “free-riding.” Formerly, this time frame was three days after purchasing a security, but in 2017, the SEC shortened this period to two days.
So, if you're asking yourself if now is a good time to buy stocks, advisors say the answer is simple, no matter what's happening in the markets: Yes, as long as you're planning to invest for the long-term, are starting with small amounts invested through dollar-cost averaging and you're investing in highly diversified ...
Risks associated with after-hours trading include less liquidity, wide spreads, more competition from institutional investors, and more volatility. After-hours trading allows investors to react immediately to breaking news and is much more convenient.
If you are looking to day trade stocks, the best time to do that may be in the morning, right after the market opens at 9:30 a.m. ET until about 11 a.m. ET. It's when you will end up seeing the bulk of your gains.
Day traders prefer volatility so they can capitalize on price swings throughout the day. That's why you might read that the best time of day to buy and sell stocks is between 9:30-10:30 a.m., or 3-4 p.m. The first and last hours of trading see a lot more action than the middle of the day.
Evidence suggests that around 100 percent of stock market gains occur between the closing bell and the next morning's open - in other words, overnight. Other research suggests that this effect is the strongest in momentum stocks.