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The Best Time to Trade (& Avoid Trading) Stocks

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I often get asked, what is the best time to trade for a new or part-time trader? Today we’re gonna to break that down.

Do you like to trade mornings, or afternoon? I’d like to know. Comment below and say, morning or afternoon.

So, in today’s video I’m gonna breakdown the trading day, as well as kind of give you an idea of what I think, after years of mentoring new traders, are the best times of the day to trade.

If you’ve looked at some of my history, I’ve been a, I was a part-time trader for the first five or six years of my career, and I really had to focus on specific times of day, because I had a business, I had commitments, I had family, and I kind of worked out a strategy that worked well.

Let’s start out with outlining the trading day, and the periods we’re gonna talk about.

You’ve got pre market, you’ve got the morning, the afternoon, and then after hours. So, you’ve got premarket and after hours, which are times that I recommend avoiding as a trader, except for some kind of outlier situations.

Every now and then, there might be a stock that’s so attractive in premarket that you feel like you have to trade it, but typically, premarket is a time to watch, prepare, make your notes, build your watch list, and get prepared for the day.

Then after hours, after 4 p.m. Eastern, I say beyond just extreme outlier situations, after hours should be avoided. You will see some of the craziest moves, stocks rocket straight up, but then go all the way back down, and even go red.

I would very much caution you to avoid after hours, and then use premarket for preparation.

Premarket for Preparation

Premarket is 4 a.m. to 9:30 a.m. Eastern. So, those are the times to avoid. When are we gonna actually trade, you might ask. Let me give you my two favorite times. The first time is 9:45 a.m. Eastern.

Now, I will say this, these are windows, okay? Even though I say 9:45, it sounds a very precise time, there’s a window of opportunity there. It could be 9:36, it could be 10:15 a.m., but what the idea, the concept is, waiting for the market open to shake out, we call it.

If your new to trading, you might not know what I mean. If you’ve been around, you know that at 9:30, when that bell rings, stocks get very whipsaw, chop, chop, chop, chop, chop. Then, whether it be an up trend, or a down trend, about 9:45 they start to stabilize, and start making some sort of trend.

I watch every market open. At StocksToTrade Pro we do a live Webinar every single day. Where you see me, and we break down the market open, but very seldom are we pressing those buttons at exactly 9:30. We let the trade shake out, we let the trend form, then we look for that 9:45 move, and my favorite pattern is that big premarket gainer that has news, and you see over and over again these stocks will dip into the open, then they can reclaim into that 9:45, 10 a.m. window, and the nice thing about that is you’ve got a clearly defined stop-loss.

You’re basically buying the breakout on the premarket lows. Stock, if you’re trading the momentum stock, and it takes out the morning lows, you need to stop out. I love clearly defined stop-losses. They tell you, if you’re still in the stock, you’re crazy. That’s what I like about that morning low.

Then, my second favorite time to trade is the 2 p.m. window.

Again, it’s a window, but what we see as day traders, we see a lot of these stocks that are above VWAP, or below VWAP, and that gives you a great trade, whether you’re long bias, or short bias. I think back when I was a part-time trader, I didn’t trade, even that 9:45 window.

I had a business, I had things to do. I would watch all premarket, make my plans.
The majority of my trades, were those late-day fades. This is a, you know we’re going back a few years now, when it was, we were looking to short sell a lot of these momentum breaks late-day, and I loved that stock that was up early in the morning, I write it in my log, I go about my day, take care of business, come back late-day, and if that stock is fading under VWAP, you look to short that, with risk on the VWAP reclaim.

So now, we’ve got a clearly defined entry, as well as a stop, and then the goal would be that all day fade, and then the next day gap down that you would cover into. Remember, with short selling, you can make money when stocks go down.

Now, these days, kind of post 2015, 2016, I look to flip that chart upside down, and I love that big gainer early, that maybe you didn’t take in the 9:45 window. It’s held above VWAP, which is volume-weighted average price.

We talk about it a lot, check out our other article, but it’s above VWAP, into the 2 p.m. window, gets a volume spike, that is a consistent setup that we look to trade, literally every day.

We call it the VWAP hold high of daybreak. Great consistently repeatable setup, and as I mentioned, it gives you a clear risk.

If you don’t have a stop, if you don’t have a point where you’re gonna take that loss, if the trade doesn’t work, it’s not a trade, you’re just hoping for the best.

On this setup, if that stock fails to breakout on the day, breaks back below VWAP, it’s now bearish, you stop out, you move on, you look to make the next trade. So, in summary, watch in premarket, watch closely in premarket, but if it’s not like amazing news, be patient, wait.

Wait for that dip and rip. Wait for that new high break, around that 9:45 window. Then, middle of the day, lot’s of times stocks get a little choppy, but watch, prepare, and get ready for that 2 p.m. window.

So, my two favorite times of the day, 9:45 and 2 p.m.

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