Best Time(s) of Day, Week, and Month to Trade Stocks (2024)

Unlike long-term investing, trading often has a short-term focus. A trader buys a stock not to hold for gradual appreciation but for a relatively quick turnaround, often within a set time period—whether that be a few days, a week, a month, or even a quarter.

And of course, day trading, as the name implies, has among the shortest time frames of all.The day trader’s analysis may be broken down into hours, minutes, and even seconds—and the time of day when a trade is made can be an important factor to consider.

Is there a best day of the week to buy stocks? Or a best day to sell stocks? Does a best time of year to buy stocks exist? How about a best month to buy stocks, or to sell them?

In this article, we’ll show you how to time trading decisions according to daily, weekly, and monthly trends.

Key Takeaways

  • Traders often have set holding periods to time when to enter and exit their trades.
  • Day trading, as the name implies, has the shortest time frame, with trades broken down into hours, minutes, and even seconds. The time of day when a trade is made can be an important factor to consider.
  • The closest thing to a hard-and-fast rule is that the first hour and last hour of a trading day are the busiest, offering the most opportunities, while the middle of the day tends to be the calmest and most stable period of most trading days.
  • Some traders believe that certain days offer systematically better returns than others, but over the long run, there is little evidence for such a market-wide effect.

Best Times of Day to Buy or Sell Stocks

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.

A skilled trader may be able to recognize the appropriate patterns and make a quick profit, but a less skilled trader could suffer serious losses as a result. So if you’re a novice, you may want to avoid trading during these volatile hours, or at least within the first hour.

However, for seasoned day traders, the first 15 minutes following the opening bell is prime time, usually offering some of the biggest trades of the day on the initial trends.

The opening period (9:30 a.m. to 10:30 a.m. Eastern Time) 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. Once that happens, trades take longer and moves are smaller with less volume.

It's generally impossible to time the market; knowing when the market will be up or when it will be down. Plenty of research, such as knowing the financials of the company you are interested in and the condition of the overall economic environment can help you make the right timing decisions.

If your day trading involves index futures such as , or an actively traded index exchange-traded fund (ETF) such as the , you can begin trading as early as 8:30 a.m. (premarket) and begin tapering offaround 10:30 a.m.As with stocks, trading can continue up to 11:30 a.m., but only if the market is still providing opportunities.

The middle of the day tends to be the calmest and most stable period of the trading day. During this time, people are waiting for further news to be announced. Because most of the day’s news releases have already been factored into stock prices, many are watching to see where the market may be heading for the remainder of the day.

Because prices are relatively stable during this period, it’s a good time for a beginner to place trades, as the action is slower and the returns might be more predictable.

In the last hours of the trading day, volatility and volume increase again. In fact, common intraday stock market patterns show the last hour can be like the first—sharp reversals and big moves, especially in the last several minutes of trading.

From 3 p.m. to 4 p.m. ET, day traders are often trying to close out their positions, or they may be attempting to join a late-day rally in the hope that the momentum will carry forward into the next trading day.

Best Day of the Week to Buy Stocks

There are some who believe that certain days offer systematically better returns than others, but over the long run, there is very little evidence for such a market-wide effect.

Still, people believe that the first day of the workweek is best. It’s called the Monday effect or the weekend effect. Anecdotally, traders say the stock market has had a tendency to drop on Mondays.

Some people think this is because a significant amount of bad news is often released over the weekend. Others point to investors’ gloomy mood at having to go back to work, which is especially evident during the early hours of Monday trading.

For whatever reason, the Monday effect has largely disappeared. The chart below shows that while Mondays on average have marked negative returns for the S&P 500 from 2000 to June 2023, the effect is very small.

Nevertheless, if you’re planning on buying stocks, perhaps you’re better off doing it on a Monday than on any other day of the week, and potentially snapping up some bargains in the process.

Best Time(s) of Day, Week, and Month to Trade Stocks (1)

Best Day of the Week to Sell Stocks

If Monday may be the best day of the week to buy stocks, then Thursday or early Friday may be the best day to sell stock—before prices dip. If you’re interested in short selling, then Friday may be the best day to take a short position (if stocks are priced higher on Friday), and Monday would be the best day to cover your short.

In the United States, Fridays on the eve of three-day weekends tend to be especially good.Due to generally positive feelings before a long holiday weekend, the stock markets tend to rise ahead of these observed holidays.

Best Month to Buy Stocks

The markets tend to have strong returns in March, April, and July, and then the fall months into winter, October to December. The chart below shows the monthly average returns for the S&P 500 over the period from 1950 through 2023:

Best Time(s) of Day, Week, and Month to Trade Stocks (2)

There’s something called the January effect. The idea that at the beginning of a new year, investors return to equity markets with a vengeance, pushing up prices—especially of small-cap and value stocks, according to "Stocks for the Long Run: The Definitive Guide to Financial Market Returns and Long-Term Investment Strategies" by Jeremy J. Siegel. But again, as information about such potential anomalies makes its way through the market, the effects tend to disappear. In the chart below, from 2000 to 2019, we see that January prices rose 10 times but also decreased 10 times.

Best Time(s) of Day, Week, and Month to Trade Stocks (3)

So again, the last trading days of the year can offer some bargains with an expected uptick in January, but it is not guaranteed.

Best Month to Sell Stocks

September is traditionally thought to be a down month. The September effect highlights historically weak returns during the ninth month of the year, which could be aided by institutional investors wrapping up their third-quarter positions. In fact, looking at the chart above of monthly average returns, September averages the worst in the calendar year. As a result, some traders believe that September is the best month to sell stocks.

The October effect is also salient for some investors. Even though October, on average, has been a positive month historically, many of the worst market crashes have occurred in this month (Panic of 1907, the Great Depression, and Black Monday). So while September may, on average, be a weaker month than October, you may want to sell in this month to avoid the above-average volatility that October can experience.

Best Date of the Month

There is no single day of every month that’s always ideal for buying or selling. However, there is a tendency for stocks to rise at the turn of a month. This tendency is mostly related to periodic new money flows directed toward mutual funds at the beginning of every month.

In addition, fund managers attempt to make their balance sheets look pretty at the end of each quarter by buying stocks that have done well during that particular quarter. Stock prices tend to fall in the middle of the month.

So a trader might benefit from timing stock buys near a month’s midpoint—the 10th to the 15th, for example. The best day to sell stocks would probably be within the five days around the turn of the month.

Are There Really Best Times to Buy or Sell Stocks?

Historically, some days or months have tended to be better or worse for stocks. These so-called market anomalies challenged theories of efficient markets. However, research shows that as these anomalies became more well-known and trading became more automated, these have largely all disappeared.

Is There a General Rule for Timing Trades?

The closest thing to a hard-and-fast rule is that the first hour and last hour of a trading day are the busiest, offering the most opportunities. But even so, many traders are profitable in the off-times as well.

How Does Dollar-Cost Averaging Help Investors?

Dollar-cost averaging is the practice of buying the same amount of a specific stock at consistent intervals. For example, you may buy five shares of stock ABC every two months, regardless of the price. This helps reduce price volatility and can potentially reduce the overall average price paid for each share. It also removes trying to time the market.

The Bottom Line

These suggestions for the best time of day to trade stocks, the best day of the week to buy or sell stocks, and the best month to buy or sell stocks are generalizations, of course. Exceptions and anomalies abound, depending on news events and changing market conditions.

Still, academic evidence suggests that any patterns in market timing where one can consistently generate abnormal returns are generally short-lived, as these opportunities are quickly arbitraged away and markets become more efficient as traders and investors increasingly learn about the patterns.

Best Time(s) of Day, Week, and Month to Trade Stocks (2024)

FAQs

Best Time(s) of Day, Week, and Month to Trade Stocks? ›

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 a.m. and 10:30 a.m. or 3 p.m. and 4 p.m. The first and last hours of trading see much more action than the middle of the day.

What is the 3-5-7 rule in trading? ›

The 3–5–7 rule in trading is a risk management principle that suggests allocating a certain percentage of your trading capital to different trades based on their risk levels. Here's how it typically works: 3% Rule: This suggests risking no more than 3% of your trading capital on any single trade.

What is the best time of the week and day to buy stocks? ›

The best time of day to buy stocks is usually in the morning, shortly after the market opens. Mondays and Fridays tend to be good days to trade stocks, while the middle of the week is less volatile.

What is the 11am rule in trading? ›

In simple terms the rule states that: If a trending stock makes a new high after 11:15-11:30am EST, there is a 75% chance of closing within 1% of High of day (HOD).

What is the 10 am rule in the stock market? ›

Some traders follow something called the "10 a.m. rule." The stock market opens for trading at 9:30 a.m., and the time between 9:30 a.m. and 10 a.m. often has significant trading volume. Traders that follow the 10 a.m. rule think a stock's price trajectory is relatively set for the day by the end of that half-hour.

What is 90% rule in trading? ›

Understanding the Rule of 90

According to this rule, 90% of novice traders will experience significant losses within their first 90 days of trading, ultimately wiping out 90% of their initial capital.

What is No 1 rule of trading? ›

Rule 1: Always Use a Trading Plan

You need a trading plan because it can assist you with making coherent trading decisions and define the boundaries of your optimal trade.

What is the 3 day rule in stocks? ›

The 3-Day Rule in stock trading refers to the settlement rule that requires the finalization of a transaction within three business days after the trade date. This rule impacts how payments and orders are processed, requiring traders to have funds or credit in their accounts to cover purchases by the settlement date.

Which time frame is best for day trading? ›

Trading at the Opening of the Market

Hence, this makes the time frame between 9:30 am to 10:30 am the ideal time to make trades. Intraday trading in the first few hours of the market opening has many benefits: – The first hour is usually the most volatile, providing ample opportunity to make the best trades of the day.

What time of day is cheapest to buy stocks? ›

During the last 10-15 minutes before market close. Or about an hour after the market opens. And lastly to avoid the lunchtimes as it's generally the quietest time of the market day of you want to get the best price possible for either the buy or the sale.

What is the 5 minute rule in trading? ›

The 5-Minute strategy is created to aid sellers and buyers engage in back tracking and spend some time in the location with the appearance of prices proceed in a latest route. The system depends upon exponential moving averages and the MACD forex trading indicators.

What are good trading hours? ›

The opening period (9:30 a.m. to 10:30 a.m. Eastern Time) 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.

What is the 15 minute rule for day trading? ›

Here is how. Let the index/stock trade for the first fifteen minutes and then use the high and low of this “fifteen minute range” as support and resistance levels. A buy signal is given when price exceeds the high of the 15 minute range after an up gap.

What is the rule number 1 in the stock market? ›

Rule #1 comes from the famous statement from Warren Buffett: “Rule No. 1: Never lose money.

Can I buy a stock in the morning and sell it in the afternoon? ›

Absolutely, you can buy and sell stocks within the same trading day. This dynamic strategy, known as day trading, is an integral part of the financial landscape and serves as the lifeblood for many traders.

What is the 1 rule in stock market? ›

The 1% rule demands that traders never risk more than 1% of their total account value on a single trade. In a $10,000 account, that doesn't mean you can only invest $100. It means you shouldn't lose more than $100 on a single trade.

What is the 357 strategy in trading? ›

The strategy is very simple: count how many days, hours, or bars a run-up or a sell-off has transpired. Then on the third, fifth, or seventh bar, look for a bounce in the opposite direction.

What is the 80 20 rule in trading? ›

In investing, the 80-20 rule generally holds that 20% of the holdings in a portfolio are responsible for 80% of the portfolio's growth. On the flip side, 20% of a portfolio's holdings could be responsible for 80% of its losses.

What is the 3 30 rule in trading? ›

The 3-30 rule in the stock market suggests that a stock's price tends to move in cycles, with the first 3 days after a major event often showing the most significant price change. Then, there's usually a period of around 30 days where the stock's price stabilizes or corrects before potentially starting a new cycle.

Is it legal to buy and sell the same stock repeatedly? ›

Just as how long you have to wait to sell a stock after buying it, there is no legal limit on the number of times you can buy and sell the same stock in one day. Again, though, your broker may impose restrictions based on your account type, available capital, and regulatory rules regarding 'Pattern Day Traders'.

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