When is the Best Time to Buy and Sell Stock

One of the richest value investors in the world and Chairman of Berkshire Hathway, Warren Buffet once said, "Investing is about TIME in the market and not TIMING the market".  

This quote mostly holds true and investing in the stock market is a long-term game. However, one thing you need to know is that success in the stock market is also about probability and more the odds are in your favor the better are your chances to earn decent returns from the market. 

It is true that whenever you start investing it becomes the right time but there are times or periods when investing becomes more lucrative because of the odds working in your favor and the risk of losses are minimized. For example- buying market dip during drastic events like Covid or recession.  

Whenever the price of a stock is at an all-time high there are chances that it has reached its maximum limit and might fall in the near future. On the contrary if a company is fundamentally strong but is trading on its all-time low due to market volatility or other temporary market conditions then there are chances that the share price might go up in the near term.  

However, the stock market is not all that simple and there are some things which you should consider before putting your money in stock. Here are some of the points you should take into account before entering the world of stocks: 

 

 

Identify your investment style 

People investing in the stock market can be classified into two types- Traders and Investors. Traders are those who leverage the short-term ups and downs of the stock market and make money by buying and selling the lows and highs.    

On the other hand, investors are those people who pick up stocks of fundamentally strong companies for a longer duration i.e. generally for more than one year. Before investing you should identify under what category you come in based on your goals and risk-taking appetite. There is a high degree of risk for traders whereas the elements of risk in investments are lower in comparison to trading. 

 

 

Best time to trade 

In Intraday trading time frames play an important role. So, if you are an Intraday trader there are slots or period of time in a day where you the conditions are more conducive for you to earn profits. The stock market in India works from 9:15 am to 3:30 pm and not all the hours between the time slot in equally conducive for traders. The best trading time of the day can be divided into three phases: 

- Opening hour  

- Mid-day  

- Closing hour 

  

1) The first hour of the day from 9:15 am to 10:15 am is known as the opening hour most volatile period of the day as the market reacts to overnight news. It presents a great opportunity for smart traders to make quick returns by taking advantage of this volatility. 

2) The period between 12:00 pm to 1:00 pm is known as midday when the market slows down and has relatively fewer price swings. It is ideal for traders who want a less volatile market to trade with lower-frequency trade in comparison to the morning session.  

3) The last hour of the day, which lasts from 2:30 pm till 3:30 pm, is when liquidity is very high with significant price fluctuations as traders look to close their positions. This is a perfect time to identify trend reversals or momentum trades. Making sense of the right time to trade is a different ball game than selecting the right stocks for intraday trading and you should ensure that you pick the right stocks to trade 

 

you also need to know how to start intraday trading

 

Learn basics of stock market 

While you do not need to be a stock market expert to start investing but still you need to have the basic understanding of how the market works to invest in it. Before starting your investment journey, you must have a basic understanding of basics such as factors affecting stock prices, fundamental analysis, risks associated with different asset classes, and various strategies used for investment.

Know the best intraday trading strategies and options trading strategies 

 

 

Invest surplus funds 

Investment is essential to achieve financial independence in today's world but at the same time it is also important to understand that you invest only with the surplus amount after setting up funds aside for your current costs. Once all your essential costs are met or funds are set aside for them, including the emergency costs you can invest with the remaining investible funds. 

 

 

Start as early as possible  

Although there is no age restriction for investing in the stock market, it is always advisable to start your investment journey as early as possible. Starting early allows compounding more time to work its magic that results in higher returns for investors. 

Long-term investments are considered to be a safe option and for that you need to start as early as possible. Generally, a time horizon of 10-15 years is considered to be a decent time frame to give high returns at a lower risk. 

Know How to select good Stocks for long-term investment?