Know the Different Times of the Day to Make Profits

Are you familiar with how the U.S. stock market typically operates throughout a given trading day? Though these tendencies are only approximations – meaning you shouldn’t expect every trading day to look exactly the same – pullbacks and reversals in stock prices tend to be observed near certain times of day.

The following is a list of standardized times based on Eastern Standard Time, with the opening bell at 9:30 AM and markets closing at 4:00 PM.

It’s worth noting that index movements, which are an average of several stocks, may cause slight variations.

9:30 AM
Right at the opening bell, there is typically a push in a particular direction. While the price may fluctuate a few times during the first 15 minutes of trading, it will typically move in one direction. If there isn’t much movement early on, it could indicate a slow day ahead. But be warned: the first hour can be quite volatile.

9:45 AM
The direction the price is heading in during the first 15 minutes of trading usually continues during this time frame. However, there’s a chance of a noticeable pullback or even a complete reversal of the trend.

10:00-10:30 AM
The “gut check” of the trend happens around this time. Another major correction against the existing trend is likely to occur, which could take the form of a full reversal or a pullback. Pay close attention to the price moves to help you determine your tactics.

11:15-11:30 AM
When the London Stock Exchange closes at 11:30 AM EST, European traders start moving out of their positions. These moves create or test a new low or high, and tend to be the last significant market changes before lunchtime.

1:30-2:00 PM
This timeframe is when trends are most likely to be reasserted. Watch out for a possible breakout during this period.

2:00-2:45 PM
Not much happens during this timeframe, but be cautious nevertheless. People are starting to shuffle around in preparation for the closing bell.

3:00-3:30 PM
The trend may shift quickly during this timeframe as traders try to make their final moves for the day. This can sometimes be a “shakeout” period, and though profitable trades can be made, don’t bet on it.

3:55-4:00 PM
If you don’t have a specific strategy for trading during the very end of the day, you should finish up no later than three to five minutes before the market closes. A closing auction occurs at 4 PM, when everything is done in a single transaction.

Knowing how stock prices usually behave at different times during the trading day can give you a competitive edge over other traders who aren’t aware of these tendencies. This knowledge can lead to more successful trades and greater profitability.



Article by Luis Nieves

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