How many trading days in a year? There are 365 days in a year but you can only trade during 252 days. The stock market does close for certain holidays and weekends. You’ll learn more about that in this post.
Table of Contents
- How Many Hours in a Trading Day?
- What Days Are the Stock Market Closed?
- What Is the Best Time Of the Month to Buy Stocks?
- What Is the Best Time of the Day to Buy and Sell Stocks?
How Many Hours in a Trading Day?
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.
- 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.
- The single best month to buy a stock over the last 40 years and in every decade since has been April.
- 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 share prices reflect all information, and stocks trade at their 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 he 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
Is There a Best Day of the Week to Buy Stocks?
If you look back in time, a common trend emerges on Monday’s. 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 thinking of selling, do it on a Friday before the Monday Effect dip occurs. This couldn’t be more 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 personally, I don’t buy on a Friday; I wait until the weekend shakes out.
Remember that when you’re looking at the trading days in a year. You want to buy on the best day.
What Days Are the Stock Market Closed?
- What days are not apart of the trading days in a year?
- 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 Stock?
It’s not a far stretch to stay that if Monday is the best day to buy, Friday just might be the best day to sell. Selling before the dip ensures you lock in profits, and there’s nothing wrong with that.
Alternatively, if shorting is more your style, then 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! Which is helpful when you know the trading days in a year.
What Is the 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 price during this time. After this flurry of buying activity, things calm down, causing falling stock prices in the middle of the month.
So, what is a trader to do? You might want to consider timing your buys around the middle of the month, and your sells in the beginning.
What Is the Best Month to Buy Stocks?
Using stock market data over the last 20 years, April is the best time of the 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 often go up again in January, particularly for value and small-cap stocks. Without a doubt, the worst month to buy stocks is September, with an average loss of -0.83%.
What Is the Best Time of the Day to Buy and Sell Stocks?
The whole period between 9:30 AM and 10:30 AM ET is often the best and wildest time of the day for trading. In fact, anything goes in the first 15 minutes as many are making trades based on news released over the weekend.
We end up seeing sharp price movements, wild volatility and out of control market volumes. For someone who likes to capitalize on an opportunity, the first 15 minutes after the market open is it.
With stocks overextended in either direction, on high volume, the chance to make 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.
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.
I hope you enjoyed this article and it helped you. At Bullish Bears, we have strategies for every type of trader and mentors to guide you.
Please take a look at Bullish Bears to see how we can help you improve your trading skills. We can help you craft your strategy to suit your lifestyle.