How many trading days in a year? There are 365 days a year, but you can only trade for 252 days. The stock market does close for certain holidays and weekends. You’ll learn more about that in this post.
How Many Stock Trading Days Are There in a Year?
There are 252 trading days in a calendar year. How many hours are there in a trading day? The stock market is open from 9:30 am to 4:00 pm EST. That means there are 6 1/2 hours in a trading day.
Quick Takeaways
- Prime trading time is the first 15 minutes following the opening bell.
- The stock market has tended to drop on Mondays; consider buying dips here.
- Stock prices peak on Fridays, especially Fridays before long weekends. Consider selling your longs for profit or entering a short position here.
- April is the best month to buy stock over the last 40 years and every decade since.
- With an average loss of -0.83%, September is typically the worst month for stock market declines.
Six Riskiest Trading Days in a Year
Have you heard of the efficient market hypothesis (EMH)? EHM is a theory that states that share prices reflect all information and that stocks trade at fair market value on exchanges.
I suggest you throw the efficient market hypothesis out the window. This is because there are at least six reoccurring trading days in a month where volatility will be higher than usual. You can use this during the trading days in a year.
- The last trading day of the month
- The 1st trading day of the month
- Non-farm payrolls Friday
- Option expiration Friday
- “Fed days” or FOMC days
- Earnings announcement days
Best Day of the Week to Buy Stocks
If you look back in time, a common trend emerges on Mondays. Also known as the “Monday Effect,” the market tends to dip on Monday.
Some speculate this is due to bad news released over the weekend or even a generally negative outlook from having to go back to work.
Because of this, if you’re considering selling, do it on a Friday before the Monday Effect dip occurs. This is especially true if Friday is the first day of a new month or when it precedes a three-day weekend.
For whatever reason, your guess is as good as mine, but the Monday Effect has mostly disappeared. But I don’t buy on a Friday; I wait until the weekend shakes out.
Remember that when you’re looking to trade certain times. You want to buy on the best day.
What Days Are the Stock Market Closed?
- What days are not trading days?
- New Years Day
- Martin Luther King Jr Day
- Washington’s Birthday
- Good Friday
- Memorial Day
- Fourth of July
- Labor Day
- Thanksgiving Day
- Christmas Day
You can find these days on the NYSE website. They keep them up to date for each year. As a result, you’ll always know when the market is closed.
Best Day of the Week to Sell Stocks
It’s not a far stretch to say that if Monday is the best day to buy, Friday might be the best day to sell. Selling before the dip ensures you lock in profits; there’s nothing wrong with that.
Alternatively, if shorting is more your style, Friday may be your best day to take a short position. Once again, since prices tend to fall on Mondays, look to cover your short position then.
People are predictable in all aspects of their lives, which spills over into the stock market. Take, for example, the excitement on a Friday leading up to a long weekend. Stocks also tend to rally before a three-day holiday.
See for yourself the rise in the stock market ahead of long weekends. Open up your trading chart; I bet you’ll see a rise!
Best Time of the Month to Buy Stocks
There are no hard and fast rules that say one day is better than another, but we notice some trends. For starters, stock prices tend to rise at the beginning of a new month. You can thank the mutual fund industry for that. Many fund managers balance their sheets and buy stocks for their clients that have done well in the previous quarter.
Because of this, we see an influx of money and a rise in stock prices during this time. After this flurry of buying activity, things calm down, causing falling stock prices in the middle of the month.
So, what does a trader do? You might want to consider timing your buys around the middle of the month and your sells in the beginning.
Best Month to Buy Stocks
Using stock market data over the last 20 years, April is the best month to buy. On average, the S&P500 has increased by 2.4% in 15 of those last 20 years.
Similarly, I suggest looking at October and November to buy. October is generally positive overall. When you crunch the numbers from the S&P, prices increased by 1.17% and 1.08%, respectively, increasing 75% of the time.
Prices increase again in January, particularly for value and small-cap stocks. September is, without a doubt, the worst month to buy stocks, with an average loss of -0.83%.
Best Time of the Day to Buy Stocks
Between 9:30 AM and 10:30 AM ET is often the best and wildest time for trading. Anything goes in the first 15 minutes, as many are making trades based on news released over the weekend.
We see sharp price movements, wild volatility, and out-of-control market volumes. The first 15 minutes after the market opens are ideal for someone who likes to capitalize on an opportunity.
With stocks overextended in either direction, on high volume, the chance to make a huge bank is there. However, if you’re a new trader, I suggest you steer clear.
You will get steamrolled by those who get in and out before you even realize the opportunity has passed you by.
Final Thoughts on How Many Trading Days in a Year?
If you are trading, you must factor in the best trading days in the year to trade. The more you narrow this down, the easier it will be to build your strategy and trading plan.
Frequently Asked Questions
Traders are limited to the day trades within a five-day trading period due to the PDT rule. If they have at least $25,000 in an account, they could make unlimited day trades in a year.
There are approximately 20 trading days in a month, which means 200 trading days would be approximately 10 months.
There are only 252 trading days because the major exchanges are closed on the weekends and major holidays.
