Company news released during the midday or afternoon hours seldom creates the volatility seen after the open.
Afternoon HoursĪfter the morning mayhem, price movements and trading volume tend to settle down. EST-is possibly the best time of the day to buy and sell stocks for those who are looking to capitalize on price volatility. The upshot: Early market trading between 9:30 a.m.
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So they can buy and sell during these first few minutes and hours with the full knowledge that stock prices typically stabilize by midday. Traders know the price-moving news is old by the time the market opens. In fact, traders often refer to the market open as being full of “dumb money”-a harsh phrase used to describe those who buy or sell at the worst possible times, usually on the heels of a bombastic early morning headline. Professional traders know that the stock market open is one of the best times of the day to buy and sell stocks. Similar to overnight news, new headlines before the open can drive plenty of pre-market trading, with similar effects as overnight news.
These trades are settled after the open, which can drive big gains or losses in stock prices. Company news that breaks after the closing bell on the prior day often drives after-hours trading. The reasons may vary, but two of the most common causes of price volatility at this time include:
Stock prices typically see dramatic moves right after the open. EST, which begins cash trading in the U.S. Here are the key characteristics of each part of the trading day, and a look at why they are the best times to buy or sell stocks. Seasoned traders know that certain times of the trading day offer better buying and selling opportunities than others.
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