The best time to trade in the market is often the initial two hours after the opening bell itself. The main reason for this is because the stock price is trying to factor in all the news post previous closing, and hence during such price discovery, an opportunity to enter into a good trade can exist. When it comes to stock trading, one should strike while the iron is hot – so look for the best deals and grasp them as soon as you see them because they are highly sought after.
Because of all of this activity, the initial one or two hours of the workday – or just the earliest 15 minutes – are often more volatile. If you have access to an options trading app, you may have noticed transaction volumes, and price fluctuations flatten out as the day proceeds. This is because the newly updated macroeconomic advancements and market occurrences are already absorbed into stock prices.
This also means that the possibilities accompanying volatility on an online trading platform are often at their peak shortly after markets open, declining throughout the day. However, the activity often picks up in the final hour of a trading session.
So Which Days Of The Week Are Good To Trade In Options (And Why?)
An application specifically designed for trading in the stock market, such as an options trading app, regularly updates the relevant information required for trading. By following past trends, one can usually determine which days of the week are suitable for buying and selling stocks.
- Best Day Of The Week To Buy
With time, a hypothesis has emerged that particular days of a week are better for earning more significant returns. Some tactics can be improved by buying stocks at the proper time of the week.
And according to it, Mondays are often the best trading days to enter a buy position. This is often called “The Weekend Effect” or “The Monday Effect.” According to the notion, markets tend to fall on Mondays due to a more significant accumulation of unfavorable news over the weekend. But when it comes to options, Mondays have an added advantage – Time Value of Money. Since you put in your trade on Monday, you will have back-to-back business days where you can transact, unlike opening your position at the end of the week, where you will have to dig in option prices due to the falling time value of money.
Although several government investigations have discovered a link between the price of particular instruments and weekdays, this explanation is yet to be understood.
- Best Day Of The Week To Sell
Many traders believe that equities and indices are priced higher on Fridays, possibly due to weekend enthusiasm or because the news from Saturday and Sunday hasn’t yet been factored into the market, simply because they are unknown. This might make Friday a favorable day to sell equities to get a somewhat higher price than Monday. Again when it comes to Options, Fridays possess an added disadvantage for buying as two non-business days are right in front where a trader will have to take a hit in the time value of money irrespective of everything as the market stands closed and the days until expiry gets reduced anyways.
Conclusion
Regardless of the above trends, if you can invest wisely and at the right time, you will enhance the likelihood of your portfolio performing better. Even when market-timing has assisted traders in generating extraordinary profits, it is worth noting that the entire action could be rendered useless if it is not accompanied by in-depth stock selection and substantial research. So it is advisable not to always follow these market trends and act on research while making trades via your options trading app.
