What is the Right Time to Invest in Stocks?
Whether you are a newcomer or an experienced hand, the eternal question in trading is always – what is the best time to buy (or sell) stocks? Here are 4 simple recommendations on the right time to invest in stocks.
1. The Best Time of Day
Intraday traders are those who buy and sell stocks within the trading hours on a single day and make profits as a result. From a logical perspective, watching the market throughout the trading hours for an opportunity to buy or sell may seem tedious. In reality, this is not the case for the following reasons:
- Mental fatigue and confusion arise from watching too many charts and graphs.
- The volatility drops after the first 90 minutes.
- The volume in which stocks are traded might also drop after the first 90 minutes.
- You will face seasoned traders who might fluster you. Beginners shouldn’t experiment at this time – experienced traders are looking to manipulate rates and turn graphs around.
All these factors combined make 9:30 to 10:30 am the most advantageous time to trade. The stock market opens at 9:15 AM and in the first 15 minutes, experienced traders are waiting to decide their moves as a result of yesterday’s news. Therefore, it is best to avoid the first 15 minutes. To make an informed decision, you may wish to extend your trading time up to 11 am.
2. Supply & Demand For Stock
This is the most basic factor, and it is not an outside thing that is affecting the market. Supply and demand are simple metrics. If stocks are in abundance, their stock price will be lower. At the same time, if the stocks are few and the people who want to buy them are more, then their price will automatically increase.
Besides this, if a company is doing well and everyone wants to buy their share but the number of shares that they have are in less quantity. That will also lead to an increase in the share price.
3. Invest in good stocks –
Undervalued stocks are those which are available for sale on the market at a price presumed to be less than the investment’s true intrinsic value. When and if a stock becomes undervalued, traders can benefit from its future profits. Examining a company’s prospects for growth and profits can help reveal whether its stock is overvalued or undervalued. Investors can also consider the price-to-sales or price-to-cash flow metrics to make such determinations.
4. Research is Important
A good time for investors to invest in the stock market is once they have done sufficient spade work pertaining to it and have adequately researched a stock. A company’s annual report can provide information pertaining to its financial health, and its growth plans. This information is ordinarily easily accessible on a publicly listed company’s website.
It is safe to say that you must research and observe the charts, indicators and news around your preferred stocks. Avoid spending every single minute of every single day with your online trading account open on your screen. Watching the stock market and trying to cash in on every opportunity will end up being counter-productive. Be diligent in ensuring you are informed about the simple recommendations discussed in this article.