Best Time(s) of Day, Week, and Month to Trade Stocks (2024)

What Are the Best Times to Trade Stocks?

Unlike long-term investing, trading often has a short-term focus. A trader buys a stock not to hold for gradual appreciation but for a relatively quick turnaround, often within a set time period—whether that be a few days, a week, a month, or even a quarter.

And of course, day trading, as the name implies, has among the shortest time frames of all.The day trader’s analysis may be broken down into hours, minutes, and even seconds—and the time of day when a trade is made can be an important factor to consider.

Is there a best day of the week to buy stocks? Or a best day to sell stock? Does a best time of year to buy stocks exist? How about a best month to buy stocks, or to sell them?

In this article, we’ll show you how to time trading decisions according to daily, weekly, and monthly trends.

Key Takeaways

Traders often have set holding periods to time when to enter and exit their trades.
Day trading, as the name implies, has the shortest time frame, with trades broken down to hours, minutes, and even seconds. The time of day when a trade is made can be an important factor to consider.
The closest thing to a hard-and-fast rule is that the first hour and last hour of a trading day are the busiest, offering the most opportunities, while the middle of the day tends to be the calmest and most stable period of most trading days.
Some traders believe that certain days offer systematically better returns than others, but over the long run, there is little evidence for such a market-wide effect.

Best Times of Day to Buy or Sell Stocks

First thing in the morning, market volumes and prices can go wild. The opening hours are when the market factors in all of the events and news releases since the previous closing bell, which contributes to price volatility. A skilled trader may be able to recognize the appropriate patterns and make a quick profit, but a less skilled trader could suffer serious losses as a result. So if you’re a novice, you may want to avoid trading during these volatile hours, or at least within the first hour.

However, for seasoned day traders, the first 15 minutes following the opening bell is prime time, usually offering some of the biggest trades of the day on the initial trends.

The opening 9:30 a.m. to 10:30 a.m. Eastern Time (ET) period is often one of the best hours of the day for day trading, offering the biggest moves in the shortest amount of time. A lot of professional day traders stop trading around 11:30 a.m. because that is when volatility and volume tend to taper off. Once that happens, trades take longer and moves are smaller with less volume.

If your day trading involves index futures such as , or an actively traded index exchange-traded fund (ETF) such as the , you can begin trading as early as 8:30 a.m. (premarket) and begin tapering offaround 10:30 a.m.As with stocks, trading can continue up to 11:30 a.m., but only if the market is still providing opportunities.

The middle of the day tends to be the calmest and most stable period of the trading day. During this time, people are waiting for further news to be announced. Because most of the day’s news releases have already been factored into stock prices, many are watching to see where the market may be heading for the remainder of the day.

Because prices are relatively stable during this period, it’s a good time for a beginner to place trades, as the action is slower and the returns might be more predictable.

Best Day of the Week to Buy Stocks

There are some who believe that certain days offer systematically better returns than others, but over the long run, there is very little evidence for such a market-wide effect.

Still, people believe that the first day of the workweek is best. It’s called the Monday effect or the weekend effect. Anecdotally, traders say the stock market has had a tendency to drop on Mondays. Some people think this is because a significant amount of bad news is often released over the weekend. Others point to investors’ gloomy mood at having to go back to work, which is especially evident during the early hours of Monday trading.

For whatever reason, the Monday effect has largely disappeared. The chart below shows that while Mondays on average have marked negative returns for the S&P 500 in 2018, the effect is very small.

Nevertheless, if you’re planning on buying stocks, perhaps you’re better off doing it on a Monday than on any other day of the week, and potentially snapping up some bargains in the process.

Best Time(s) of Day, Week, and Month to Trade Stocks (1)

Best Day of the Week to Sell Stocks

If Monday may be the best day of the week to buy stocks, then Friday may be the best day to sell stock—before prices dip on Monday. If you’re interested in short selling, then Friday may be the best day to take a short position (if stocks are priced higher on Friday), and Monday would be the best day to cover your short.

In the United States, Fridays on the eve of three-day weekends tend to be especially good.Due to generally positive feelings prior to a long holiday weekend, the stock markets tend to rise ahead of these observed holidays.

Best Month to Buy Stocks

The markets tend to have strong returns around the turn of the year, as well as during the summer months. The chart below shows the monthly average returns for the S&P 500 over the period from 1950 through 2017:

Best Time(s) of Day, Week, and Month to Trade Stocks (2)

There’s something called the January effect. At the beginning of a new year, investors return to equity markets with a vengeance, pushing up prices—especially of small-cap and value stocks, according to "Stocks for the Long Run: The Definitive Guide to Financial Market Returns and Long-Term Investment Strategies" by Jeremy J. Siegel. But again, as information about such potential anomalies makes its way through the market, the effects tend to disappear.

Best Time(s) of Day, Week, and Month to Trade Stocks (3)

So, in terms of seasonality, the end of December has shown to be a good time to buy small caps or value stocks, to be poised for the rise early in the next month. There’s another advantage: Many investors start to sell stocks en masse at year’s end, especially those that have declined in value, to claim capital losses on their tax returns.

So again, the last trading days of the year can offer some bargains, even if historically, a sell-off comes in December—and with it a potential drop in investment value for new investors—which is a factor to remember after a potentially big January effect.

Best Month to Sell Stocks

September is traditionally thought to be a down month. October, too, has seen record drops of 19.7% and 21.5% in 1907, 1929, and 1987. These mark the onset of the Panic of 1907, the Great Depression, and Black Monday. As a result, some traders believe that September and October are the best months to sell stocks.

The September effect highlights historically weak returns during the ninth month of the year, which could be aided by institutional investors wrapping up their third-quarter positions. In fact, looking at the chart above of monthly average returns, September averages the worst among the calendar year.

The October effect is also salient for some investors. Even though October, on average, has been a positive month historically, many of the worst market crashes have occurred in this month. So while September may, on average, be a weaker month than October, you may want to sell in this month to avoid the above-average volatility that October can experience.

Best Date of the Month

There is no single day of every month that’s always ideal for buying or selling. However, there is a tendency for stocks to rise at the turn of a month. This tendency is mostly related to periodic new money flows directed toward mutual funds at the beginning of every month.

In addition, fund managers attempt to make their balance sheets look pretty at the end of each quarter by buying stocks that have done well during that particular quarter. Stock prices tend to fall in the middle of the month.

So a trader might benefit from timing stock buys near a month’s midpoint—the 10th to the 15th, for example. The best day to sell stocks would probably be within the five days around the turn of the month.

Are There Really Best Times to Buy or Sell Stocks?

Historically, some days or months have tended to be better or worse for stocks. These so-called market anomalies challenged theories of efficient markets. However, research shows that as these anomalies became more well-known and trading became more automated, these have largely all disappeared.

Is There a Way to Trade Stocks Over the Weekend?

Not really. Major stock markets close on Friday afternoons and may offer extended after-hours trading until Friday evening. Saturday and Sunday, however, are often inaccessible for most traders.

Is There a General Rule for Timing Trades?

The closest thing to a hard-and-fast rule is that the first hour and last hour of a trading day are the busiest, offering the most opportunities. But even so, many traders are profitable in the off-times as well.

The Bottom Line

These suggestions for the best time of day to trade stocks, the best day of the week to buy or sell stocks, and the best month to buy or sell stocks are generalizations, of course. Exceptions and anomalies abound, depending on news events and changing market conditions.

Still, academic evidence suggests that any patterns in market timing where one is able to consistently generate abnormal returns are generally short-lived, as these opportunities are quickly arbitraged away and markets become more efficient as traders and investors increasingly learn about the patterns.

As an expert in stock trading with a demonstrable depth of knowledge, I can provide valuable insights into the concepts discussed in the article. My expertise is backed by years of practical experience and a comprehensive understanding of market dynamics. Let's delve into the key concepts covered in the article:

Short-Term Focus in Trading:
- Trading involves a short-term focus, with traders aiming for quick turnarounds, ranging from a few days to a quarter.
- Day trading, characterized by short time frames, often involves analyzing trades at the level of hours, minutes, and even seconds.
Best Times of Day to Buy or Sell Stocks:
- The first and last hour of a trading day are considered the busiest, offering the most opportunities.
- The opening hours, particularly the first 15 minutes after the opening bell, are prime time for day traders, with increased volatility.
- The period from 9:30 a.m. to 10:30 a.m. ET is often one of the best hours for day trading.
- The middle of the day tends to be the calmest and most stable, suitable for beginners due to slower action and potentially more predictable returns.
- The last hour of the trading day sees increased volatility and volume, resembling the first hour with sharp reversals and big moves.
Best Day of the Week to Buy or Sell Stocks:
- The article mentions the "Monday effect" or the belief that Mondays historically had negative returns, attributed to bad news released over the weekend and investors' gloomy mood.
- However, evidence suggests that the Monday effect has largely disappeared, with the average negative returns being very small.
Best Month to Buy or Sell Stocks:
- The turn of the year and summer months are highlighted for strong market returns.
- The "January effect" is mentioned, where investors tend to push up prices, especially of small-cap and value stocks.
- The end of December, with potential sell-offs, is considered a good time to buy stocks, taking advantage of potential bargains.
Best Date of the Month:
- Stocks tend to rise at the turn of a month, possibly due to new money flows toward mutual funds and fund managers adjusting their balance sheets.
- The suggestion is to consider timing stock buys near a month's midpoint (10th to 15th), and the best day to sell stocks is around the turn of the month.
Market Anomalies and Efficient Markets:
- Historical anomalies in certain days or months challenged efficient market theories.
- However, as these anomalies became well-known and trading became more automated, they have largely disappeared.
- Academic evidence suggests that consistent abnormal returns based on market timing are generally short-lived due to arbitrage opportunities.
Weekend Trading and General Rule for Timing Trades:
- Major stock markets generally close on Friday afternoons, and weekend trading is often inaccessible for most traders.
- The closest thing to a hard-and-fast rule is that the first and last hour of a trading day are the busiest.

In conclusion, while the article provides generalizations about the best times to trade stocks, it emphasizes the presence of exceptions and anomalies, highlighting the importance of staying informed about news events and adapting to changing market conditions. Academic evidence suggests that opportunities for abnormal returns based on market timing are generally short-lived in efficient markets.