The stock market is very fluid and equally offers day traders with numerous stimulating opportunities. From a general perspective, day traders buy and sell shares of different companies that are part of the stock market.
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Trading on news and company events are some of the features that allow traders to still make some profits.
It is quite obvious that day traders are always excited about the stock markets. For them, it is an opportunity to make some cool bucks off selling and buying shares of some of the most renowned companies such as Tesla, Alibaba, Amazon, Google, etc. Also, day traders are always presented with various stock markets indices such as Nasdaq Composite, Dow Jones Industrial Average, FTSE 100, Hang-Seng, Dax 30, and Standard and Poor’s 500.
As a result of the widespread popularity of day trading, those who are trading for the first time can always leverage the abundant trading resources that are available online, which includes PDF materials, forums, blogs, and live screeners. Despite complementing your trading with all these available resources, you must also not forget the fact that there is fierce and ongoing competition in the stock markets. Which is why your time of trading can either make or mar you.
If you aspire to become a day trader that can make a decent living while working from the comfort of your home, then it is wrong for you to focus just on your capital. You should equally take into account the most rewarding times (hours) to place your trades.
The U.S stock market officially resumes at 9:30 and round off at 4:00 p.m. ET. Traders are also allowed to execute Pre-market orders (4:00 – 9:30 am Eastern Time) as well as (4:00 – 8:00 pm) which is an after-trade session. Even so, Pre-market and Post-market trading are less fluid and less rewarding compared to active trading hours, which is the main reason why most traders don’t like to partake in such trades.
Now, let’s come to the most important question, what are the most rewarding hours for short-term trading? Well, there are specific times that offer day traders with amazing opportunities. I will further explain them below.
9:30 am – 10:30 am ET
If you major as a day trader, your most effective time to sell or buy the stock should be between 9:30 – 10:30 am ET. That is because the first trading hours are the most volatile, which certainly translates to more profit. The more volatile a trade is, the more your chances of making profits. The stock market has to be dynamic before traders can make any profits.
For successful day trading, a trader has to do his homework by engaging in relevant research before the trading session resumes in the early hours of the morning. The most volatile market movements that promise the highest returns usually occur during this period of the day. Many experienced traders usually retire their trading by 11:30 am ET due to dull market activities and low volatility.
11.00 am – 2:00 pm ET
This is the worst period to make any reasonable profits from the market since it is the most inactive periods of the market. The reason for this is, most market participants usually use this period to go for lunch. The market is slower and coupled with smaller volume within this period – the last thing any day trader would want. As a result, this is not an ideal time for day traders to make some handsome profit from the market.
3:00 – 4:00 pm ET
While a great deal of traders prefers to rack up their earnings from the first trading hour of the day, others prefer to trade the last hour which is between 3 and 4 pm ET. This hour of the day is usually characterized by big activities like sudden trend reversals coupled with momentum gathering to the close of the day. A trader can earn some great profits during this period because the closing auction affect stock prices
The recommended trading hours, I discussed above are all based on generalizations. Anomalies and exceptions are possible, due to dynamic market conditions and news events. The closest to a winning formula is the fact that 9:00 to 10:00 am ET and 3:00 to 4:00 pm are the most active hours, which translates to more opportunities. However, some other day traders have equally benefited immensely from the other trading hours.