Yesterday, I said I would tell you the best time of the day to trade.

Unfortunately there is no one right answer. However, I did tell you when you shouldn’t be trading, which is almost as important as when you should be trading.

Trading conditions do change over the course of the day, so depending on your trading style, one time might work well for you while another might not suit you.

But, you want actual times of day, right? Keep reading, I’ll get there. I just don’t want you to think this is an exact science. It’s not.

Alright I’ve kept you hanging long enough, are you ready?

The Best Times to Trade

When the Pattern/Price Action Is Clear

Again, this seems obvious. But I see newbies try to impose their will on a stock’s price action or imagine they see a pattern that’s just not there. And – this is very important – it’s not only about the price action or pattern. Yes, it’s one of the more important indicators you should be looking for, but it’s still only one indicator.

So look for patterns and price action. But also use other indicators.

When the Risk vs. Reward Is in Your Favor

If you don’t know your risk versus reward, or it isn’t reasonably in your favor. Don’t trade. Trade with clearly defined risk. You need to know your potential reward so you can exit when you’ve met your goals or if the trade turns against you. Anything less, is almost worse than a degenerate gambler.

You’ve been warned.

When the Stock Is Liquid

I try to avoid illiquid stocks. I learned my lesson the hard way on my worst ever loss. I was, essentially, stuck in a position and took a big loss. So focus on trading when a stock has enough volume to get in and out. You still might have slippage, but at least you won’t be completely stuck.

When the Time of Day Is Good for the Pattern You’re Trading

Now we get a little more into the actual time of day. But be prepared to adapt because markets shift.

Have you noticed some of my pattern names include a time of day? I love morning panic dip buys. It’s my favorite pattern recently. That’s not to say I never dip buy other times of the day. But I particularly like the morning panic dip buys. It’s easier for me to anticipate what might happen.

Also, I don’t like to chase. There were a few weeks earlier this year when the panics were a little later. They were coming in the late morning and even into early afternoon. I attempted to adapt, but I didn’t chase. Nor should you. If the setup you like is happening but the time of day has shifted, test with small positions until you figure it out. Better yet, paper trade it.

That said, the morning panics I prefer shifted back closer to the market open. It was sort of a short-term anomaly. The lesson: be willing to adapt to changing markets.

When the Reason or Catalyst Is Strong

Learn to observe how the market reacts to news. Also, try to determine if the news is already built into the price, or if that action is still going to occur. I prefer to trade a stock when there’s a clear catalyst.

Does that mean I never trade a stock with no news? No. But when a stock comes up on my stock screener’s biggest percent gain scan, I search for news on it. I want to know what’s driving price action before I risk my hard-earned money. If there’s no news, I’m even more conservative.

When the Market Environment Is Suitable

A lot of newbies overlook this. If you’ve read my recent posts you know I’ve commented on the current market environment. Especially the trade war and how it’s creating uncertainty. As a trader, you have to be aware of the overall markets.

When you aren’t worried about a tweet causing a sudden drop in the S&P 500 … it can be much easier to trade. But if you don’t know when the next tweet or piece of news might tank the market you need to be more conservative.

Trading Times Market Wrap

My goal is to help you become a self-sufficient trader. That way you have skills for life. When it comes to the best times to trade, like everything else in trading, it’s not an exact science.

I hope this post gives you some things to consider as you build your knowledge account. Now take what you’ve learned and start testing. Even if you’re not trading yet, you can paper trade and get a feel for how stocks move at different times. Keep a trading journal as you practice — it can potentially pay dividends in the future.