Becoming a successful day trader requires a full-time commitment. It’s a job that necessitates your undivided attention and also requires you to invest in equipment such as trading computers. All of that is not enough to guarantee you success in trading however, as it is important to consider the trading options that are available as well as the best possible strategies.
You also need knowledge and experience to get far in this line of work. You must know the right time to trade and how to execute your strategy to set you up for sustainable success.
There is no foolproof plan for succeeding as a day trader. Still, you can put yourself in the best spots to succeed consistently. Read on to find out the right time to go full bore with your trading.
The Best Day to Buy Stocks
Let’s first talk about the right day to buy up stocks. Acquiring stocks at their low point is the goal every time you buy. You want to load up on an ailing stock and eventually turn around to sell it for a huge profit in the future.
Monday is typically the best day to take advantage of lower-priced stocks. Two widely circulated theories attempt to explain why stocks seemingly dip due to the so-called “Monday Effect.”
First off, you should boot up your trading computers first thing every Monday due to the mood of the market. There is a belief that the dour mood that many traders exhibit every Monday contributes to an overall dip in prices.
Many traders are not too fond of leaving the weekend so soon. That supposedly causes them to be a bit more down on stocks when they do get back to work.
The lingering effect of the previous week could also lower stock prices on Monday. Many companies have a habit of releasing bad news on Fridays. That is not a coincidence.
Releasing bad news on a Friday can soften its impact. Companies hope that their news gets less coverage by releasing late on that day. They’re also banking on the weekend taking attention away from the bad news.
Of course, the impact of the bad news will not be negated completely. Some of the carryover effects will still bleed into the new work week. The bad news released on Friday can still cause a drop in prices on Monday. The impact will indeed be lessened, but it will still be felt.
Is the Monday Effect Still Observed?
Talk to many traders and analysts today and they may offer a variety of takes on the Monday effect. Some will suggest continuing to ready your trading computers for a busy Monday. Others will say that the Monday effect is no longer a thing.
The numbers remain difficult to pin down regarding the Monday effect. You probably don’t want to rely on it too much moving forward. Still, it won’t hurt if you try to become more active during Monday mornings.
You may encounter great opportunities while everyone else is still catching up. Make sure your trading computers are ready to take advantage of those opportunities as soon as they emerge.
The Best Time to Buy Stocks
Now that we’ve discussed the best day for buying stocks, let’s turn our attention to the best time to buy. The best time to buy depends on your level of experience.
Newer traders will likely find it easier to trade during the middle of the day. Stock prices have already settled at that time. You’ll be able to get an accurate read on the market because the news from yesterday has been accounted for.
Use this time to learn how things work and develop an idea of how to proceed. You’ll also have a better chance of avoiding huge losses because you’re making low-risk purchases.
Traders cannot keep working that way for long however. Once you’ve gotten a better handle on things, you need to jump into the more volatile trading periods.
Look into trading before 11:00 a.m. ET to make the biggest profits. That is the time of the day when the biggest shifts are happening. News still gets absorbed and changes are still taking hold.
Is it risky to trade during this time? Absolutely, but you have to accept that risk.
You must take on calculated risks to make a big splash. Rely on your knowledge and experience to sniff out the good propositions. You’ll also be able to realize big profits on a more consistent basis by executing high-risk transactions.
The Best Month to Buy Stocks
We’ve already touched on the best day and the best time to buy stocks, but is there a best month to buy stocks? Is there even such a thing?
It’s obviously tougher to get an accurate read on stock performance when you’re accounting for a longer period of time. However, historical trends have indicated that the month of September is the prime time to get your trading computers in gear.
Determining why stock prices tend to tumble during the month of September is not easy.
The end of summer could be putting traders in a foul mood. The market may also be bracing for an expected lull. Shoppers will likely wait a while before they get their holiday shopping done and the market reacts accordingly.
Whatever the reason may be, prices tend to fall in September before bouncing back in a big way the following month.
Given the information included in this article, you might assume that buying is only smart on certain days, times, and months. That’s not the case though. You should still be ready to buy whenever a good opportunity presents itself.
The details in this article simply give you an idea of what to expect in the future. As a new trader, you can use what you’ve learned here to generate some positive momentum and gain some easy wins.
Trading Computers and Knowledge
Moving forward, you still have to lean on your knowledge and experience to figure out the best chances to use your trading computers. Trading is a challenging endeavor, but success in this line of work still remains eminently attainable.