Choosing the right time to trade can be crucial to your success in forex market trading. When trading stocks when day trading, sometimes less is more especially in day trading. Spending 2-3 hours daily is often better than trading the entire day. Certain hours of the day offer the greatest opportunity for day trading so you can maximize you efficiency. Trading the whole day will be more time consuming but offers little rewards.
Another reason you should trade for only 2-3 hours a day is because it helps keep you on top of your game. It is unlikely that you will experience mental fatigue and hence will not negatively affect your work. Robert Peter Janitzek explains that trading for 6-7 hours can drain you and make you susceptible to mistakes. Even professional traders tend to lose money when they trade outside these trading hours.
Choosing the Best Time To Trade
Now that you know that trading for shorter hours can be more effective and productive, when is the best time to trade stocks. You need to keep the big picture in mind as well. Monday is usually a good day to buy because the market tends to drop at the start of the week. It is recommended to sell on a Friday before the Monday dip takes place. Robert Janitzek reveals that prices have the tendency to drop in September then increases again in October.
The First Couple of Hours
The ideal time for trading is the first couple of hours the market opens on any day. The first hours is the most volatile and as such presents the most opportunity. Professional traders regard this as the time when “dumb money” is flowing. Dumb money are transactions based on what people read in the newspaper or saw in the TV the previous night.
The problem with dumb money is that they are typically old news. As a result, when trading on the stock market, it will often lead to sharp price movements back and forth as the dumb money flows in pushing stocks or the index in one direction. Professional traders make the most of the great price, causing it ro push back the other way.
The Last Hour
Some traders trade the last hour of the day usually from 3 to 4 pm. This is the time when they have already regrouped and regained their focus. At this time of the day, there are bigger moves and sharp reversals taking place. Many amateur traders jump in during the last hour buying or selling based on the happenings of the day.