Perhaps the most crucial question that investors and traders ask themselves (and each other) is whether they should buy the stock they are interested in at a low price or a high price. No matter if you are a novice or an experienced hand at the stock market, this question is on your mind at one time or another. While the question itself is not hard to answer, many investors deny that there are strategies and some fundamental rules to abide by when you wish to discover the ‘right’ time to invest. If you follow some regular rules of thumb, you may just increase your opportunity for good profits in the stock market.
The Time of Day
In the stock market, the time of day relating to investment has a lot to do with whether profit-making is possible or not. The time of day that you trade is especially vital if you are involved in intraday trading. This is when you open a trade and have to close it within the span of a trading day and make a profit too. Nevertheless, you need not necessarily do this, as it only leads to mental and physical fatigue and confusion. Moreover, the volatility in the stock market tends to fall after the initial one and a half hours. After this time, the volume of stock trading may also see a decline. If you consider all this, the perfect opportunity to trade is probably between 9.30 am and 10.30 am. Opening time in the stock market is 9.15 am and at this time (within the initial 15 minutes), the market is busy reacting to the previous day’s trends. This time is best avoided.
The Ideal Day
Opening an online trading account is perhaps the easiest task in the life of a trader. The tasks of when to buy and sell stocks are the most challenging of tasks. There are, besides the trader’s own abilities and acumen, forums and entities that tell you different tales of the best day to trade, like Friday being the perfect day to sell stocks, and Monday being ideal to buy them. The reasoning behind this is that stocks, on a Monday, are at their lowest value (so purchasing is a good idea). The same logic holds true for Friday prices being high (meaning that your stock bought at a low price would have risen in price so you can sell at a profit). Nonetheless, if every trader went along with this line of thinking, you would see no traders selling on a Monday and no buyers at the end of the week. Therefore, it is best to rely on your own analysis of a rise or fall in prices, with no ‘perfect’ day in the week to give importance to.
Conditions Being Favourable
Once you have your online trading account set up, your trading life will start. However, rather than having it begin with a bang, you should do your due diligence and take things slowly, considering some analysis measures when you buy the stock you want. When the price of shares are low, you must buy the shares. Of course, there’s a chance that prices will dip further. However, this is a safer bet than buying at high prices when the stock seems unlikely to climb further in value. Instead, you may find that prices will dip from a high value and you are bound to sell your shares, only to lose out.
Balanced Risks
When you go out and buy stocks at low rates, the chances of them going higher are significantly more than the chances of them dipping. Moreover, an important indicator, known as ‘moving averages’ can tell you about the range of the price of your stock (this is the highest price it rises to and the lowest value it ever dips to). There are many ways to know when to buy or sell stocks and if you open a Demat account linked to a trading account, a great broker like Motilal Oswal can benefit you too.
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