Best Time to Buy Stocks: An Hourly Analysis • Benzinga (2024)

Many people interested in trading stocks wonder if there are any rules about when to buy or sell stocks. While some vague timing guidelines do exist, the best time to buy or sell a stock really depends most on your own market analysis and individual company research.

With that noted, the first and last hours of the trading session generally see more trading volume and volatility than the rest of the trading day. An experienced trader could take advantage of this increased volatility to move into the market to make a profit if they accurately recognize a particular pattern of price behavior in a stock.

Business and geopolitical news also significantly impact markets and individual stocks at different times, so it pays to watch out for the common economic data release times that can result in higher volatility.

While some traders believe that certain days of the week — or even particular months — are more favorable for trading on one side of the market or the other, little science-based evidence can confirm whether this holds true over time, especially as such timing patterns become more widely known. Many traders continue to believe that certain times seem to work better for trading stocks.

Stock Market Hours

These are the standard U.S. stock market hours for New York Stock Exchange (NYSE) and NASDAQ traded stocks:

Pre-Market: The pre-market generally begins at 8 a.m. EST, but trading can begin as early as 4 a.m.

Regular Market: The main stock trading session runs from the opening bell at 9:30 a.m. EST until 4 p.m. EST.

After Market: The after market begins when the closing bell rings at 4 p.m. EST and can continue until 8 p.m. EST.

Best Time of Day to Buy Stock

Best time of the day to buy stock: During the first two hours of the trading day

According to some seasoned stock operators, the best time of the day to buy stocks for which positive news has been released over the weekend or overnight is shortly after the opening bell. The market should rise the most during the first two hours of the trading day after the opening, which is from 9:30 a.m. until 11:30 a.m. EST for the NYSE.

The New York Stock Exchange’s bell rings at the open and close of each trading session. Source: Verdin.

The reasoning behind this idea is that if a stock is set to rally due to good news that was released while the market was closed, the best prices for the stock would generally be right after the opening bell before the entire market has fully discounted that information. If the expected rally fails to take place, however, then the trader may be able to take a small loss or trade out of their position later during the trading session.

This may be the case for some stocks under normal trading conditions, although extraordinary events such as a major news item affecting an individual stock or the market as a whole can make a stock gap up or down at the open. Seeing such a gap should cause a trader cognizant of this phenomenon to be more cautious before making a purchase on the market open.

Best Time of Day to Sell Stock

Best time of day: Just before the last hour of the trading session — from 3 p.m. to 4 p.m. EST

The general trader consensus on the best time to sell a U.S. stock is probably just before the last hour of the NYSE’s trading session from 3 p.m. to 4 p.m. EST. The rationale for selling during this time frame is that most stocks that have been actively trading all day may have already reached their highest level and may therefore be set to decline into the close.

By the end of the trading day, most relevant news on any given stock has already been released. This means that whatever impact the day’s news should have on the stock’s price has already been reflected in the market, so you should not see any major shocks to the price.

Another key factor supporting selling stocks into the closing hour is that the last hour of the trading day is when day traders will need to close out all outstanding positions in order to avoid carrying trades overnight. Stocks that have performed well during the session could therefore begin to decline toward the market close as a result of day traders taking profits.

If you think you can accurately anticipate this profit-taking activity, then you may be able to short such stocks before the day traders do and then profit from this commonly-seen decline by squaring your position closer to the market close.

Best Day of the Week to Buy Stock

Best day of the week to buy stock: Monday

Monday would probably be the best day of the week to buy stock, according to a market theory called the “Monday or weekend effect.” The Monday effect says that the market will continue gaining on Monday if the market was up on Friday.

The Monday effect has largely disappeared over the last decade, however, so many traders now expect stocks to decline overall on Mondays, especially if negative relevant news was released the previous weekend.

This would make Monday purchases even more sensible since you may have a better chance of getting in at a good price, although you’ll probably want to wait until the expected Monday decline has happened first to time your entry point.

Best Day of the Week to Sell Stock

Best day of the week to sell stock: Friday

Friday would typically be the best day of the week to sell stock, especially if the Friday under consideration begins a longer than usual 3-day weekend. Stock markets tend to rally on Friday due to short covering by traders to avoid paying interest on a short position over the weekend, as well as on any optimism traders might have for market-positive news during the weekend.

If you plan on shorting a stock or buying put options, then Friday would probably be the best day of the week, although you will need to time your entry in that position until after the expected short-covering rally has occurred. You can plan on covering your short position the following Monday since stock markets might open at lower levels.

Best Day of the Month to Buy Stock

Best day of the month to buy stock: Around the 10th or 15th

Due to monthly adjustments to stock portfolios by mutual and hedge funds during the beginning of the month, the best time of the month to buy stock would be around the middle of the month, around the 10th or 15th. Stock prices tend to decline during the middle of the month, which could create a buying opportunity.

Specific dates for stocks could also present buying opportunities. For example, a company’s earnings report, news of a stock split or a potential takeover bid by another company could all present trading opportunities and are not specific to days of the week or month. To time your purchases more effectively, research when the company’s earnings are released and any other news items that might affect the price of the stock you plan on purchasing.

Best Day of the Month to Sell Stock

Best day of the month to sell stock: One of the days leading up to the last trading day of the month

The best day of the month to sell stock would probably be one of the days leading to the last trading day of the month. The week leading up to the end of the month is often used by portfolio managers to “dress up” their portfolios by buying more of the stocks in their portfolio that have performed well. This tends to drive the prices of those well-performing stocks even higher near the month-end.

“Dressing up” or improving the returns on a portfolio by marking upward trending stocks to market at the end of the month may only provide the portfolio manager with a paper gain. If you actually do sell your stock at a higher price seen near month-end, however, you’ll have realized your profit on that position.

Best Online Brokers to Buy and Sell Stocks

The stock broker you choose to partner with and execute your trades through can have a significant impact on your bottom line as a trader or investor, so be sure to choose wisely. Benzinga has compiled a table of the best online brokers you can use to trade stocks through, so you can quickly compare them and pick the one that best suits your needs.

Market Moves Often Do Not Follow Rules

Any suggestions made above about the best time of the day, week or month to buy and trade stocks should be understood as a broad generalization and not a firm rule that always holds true. As you watch the stock market over time, you will probably find many exceptions to the general guidelines previously mentioned.

This variation tends to occur because stock market movements are affected by a wide range of factors, just as individual stock prices are, so they often do not follow simple rules. In fact, many price moves arise as a result of major news events and other unpredictable elements that may not become known on a fixed time schedule.

Also keep in mind that as any timing patterns appear to arise in the stock market, the smart money is quickly finding a way to take advantage of them. As a result, any returns from exploiting such a pattern may well diminish over time.

Any trading session’s initial and concluding hours will very likely be its most active. You may see numerous trading opportunities arise during those time frames, although the times in between can also be profitable to trade on any particular day.

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