What is the best time of day to trade stocks? Unfortunately, many new traders make the mistake of overtrading and don’t realize that there are specific times of day to trade that are better than others.
What Is the Best Time of Day to Trade Stocks?
Between 9:30 am and 10:30 am EST is often the best time of day to trade stocks, especially for day trading. Market volume and prices can and do go wild first thing in the morning, precisely the first 15 minutes. People are making trades based on the news. Power hour between 3:00 pm and 4:00 pm is also a very popular time.
The best time to buy stocks is 9:30 am to 11:00 am EST because the market is most liquid. During lunchtime, you’re up against HFCs or high-frequency computers, which is the most difficult time to trade due to a lack of liquidity.
Sometimes, less is more when it comes to the world of trading. For example, did you know that to successfully day trade, you don’t need to be glued to your computer all day?
If you trade all day, you’ll likely blow up your account. But, on the other hand, sometimes all you need to devote is one hour, perhaps three, and that’s stretching it.
Buyers and Sellers
The stock market is a tug-of-war between buyers and sellers. As a result, the price fluctuates. You need three things to have good trades: price action, volume, and volatility. However, that doesn’t mean you should trade for 8 hours daily. When we think of trading for a living, we often think it has to be a typical 9-5 job. However, that’s not the case. Less is more when it comes to trading. So, the best time of day to trade stocks is the morning.
Market Open
Trading at the open creates sharp movements in price. In other words, volatility is at its peak, and this volatility means opportunity. This means it’s the best time of day to trade stocks.
The first 15 minutes of the market open for seasoned traders are their bread and butter. With stocks overextending in either direction, they take advantage of this opportunity and strike quickly.
However, if you’re a new trader, I highly recommend steering clear of the first hour until you’re comfortable identifying patterns and trends.
Middle of the Day
Fast forward to 11:30 AM, where volatility and volume tapered off. When this happens, the moves and patterns are slower to play out with less volume.
Typically, the middle of the day is the calmest and most stable. After the morning news is released, the market responds, and traders wait for the rest of the day to see where the market may go.
Will it trend sideways? What about trending to the downside? Will it trend up? As a new trader, it’s an excellent time to place trades as prices are relatively stable, translating to slightly more predictable returns.
Stock scanners can also be helpful during this time if price action is slow. Remember that the best time of day to trade stocks is the morning, unless you like slow and steady.
It is slow, though. As a result, it can be like watching paint dry. You’ve heard the saying, “A watched pot never boils.” It’s the same with trading in the middle of the day. This could be the best time of day to trade stocks for a select few.
Trading During the Last Hour of the Day
A common phenomenon you’ll see when you start to trade is that volatility and volume start to increase again in the last hours of the trading day. This is known as the power hour. This is the second-best time of day to buy stocks.
From 2:00 PM on, we see sharp reversals and more significant price moves. Like the first hour, traders jump in, buying or selling based on what has happened that day.
Typically, traders try to close out their positions; maybe shorts are getting squeezed out, or traders are trying to enter a late-day rally.
The last several minutes of trading can be particularly active, with big moves on high volume. You can use late-day trading to your advantage if you cannot capture the morning moves, which is on the best time of day to trade stocks list.
Months and Days
Let’s take a step back and take a birds-eye view of the market. First, the best time of day to trade stocks can and does include days and months.
Typically, Monday afternoon is usually a good time. However, the market tends to drop at the beginning of the week, particularly around the middle of the month. This so-called “Monday Effect” has been researched extensively.
Because of this, many experts recommend selling on Friday before the Monday Effect dip occurs. More specifically, if that Friday is the first day of a new month or precedes a three-day weekend.
Likewise, prices tend to drop in September and increase again a month later. However, October is generally positive overall, and prices often go up again in January, particularly for value and small-cap stocks.
Day Trading Stocks
No post would be complete without talking about some of my favorite stocks to day trade. Check them out during the best time of day to trade stocks. These are all large-cap stocks for me that are:
- Over a million shares traded daily on average
- An ATR of at least 1 ( I need to be able to scalp at least .50 cents from the stock
- Good fundamentals. I check them in StockRover – I want investors to have a REASON to buy
- Tight bid vs. ask spreads for the shares OR options
- The Best Day Trading Stocks for me are: $AMD $AAPL $MSFT $FB $SHOP $SPY $QQQ $JPM
Key Take Aways
Let’s take a look at some things we’ve learned about the best time of day to trade stocks:
- The first hour, or 15 minutes, is the most volatile trading time.
- New traders should avoid the first 15 minutes until they have enough practice in a simulator.
- The middle of the day is the calmest and most stable time to trade.
- Volatility and momentum tend to pick up again from 2 PM on.
Final Thoughts: Best Time of Day to Trade Stocks
One hard and fast rule is that the first and last hours of a trading day are the busiest, offering the most opportunities, which is the best time to trade stocks. Please don’t jump in and start trading the first 15 minutes; becoming a day trader takes time and dedication. However, learning professional-grade trading skills can have a life-changing effect.
Frequently Asked Questions
The stock market (US Market) opens at 9:30 New York Time (Eastern Standard Time). You may be able to place trades in the "pre-market" if your broker allows. Some brokers will let you trade as early as 4 am. Typically, we like to be up early, check the news, and look over what stocks are trading on high volume in the pre-market. That way, we are ready for when the bell rings at market open.
- High liquid large cap stocks such as $FB $NFLX $AAPL $GOOG $NVDA
- High open interest
- Lots of daily volume
- Small-cap stocks with high volume
- Look for new catalysts
- Daily chart breakouts
- Popular sector ETF's $SPY, $QQQ, $UVXY, $VXX, $SLV, $XLE, GDX
The stock market is most active between the hours of 9:30 AM EST and 10:30 AM EST. The 2nd most active time is called Power Hour, which is between 3:00 PM EST to 4 PM EST. Traders take lunch between 11:30 and 2:30 pm, and that's the time trading algorithms take over.
