If you are anything like me you start to notice patterns in the stock market. I’ve noticed that as far as technical trading goes the first thirty minutes to an hour of each trading day is the most important. If you are going to be trading stocks on a consistent basis you will want to practice stock trading from the market open for an hour or so. There are many reasons that I prefer trading at this time of day, but the biggest reason is the violent corrections the market makes early in the day. I’m not going to get into any of the specific indicators here, but there are plenty of long tested technical signals that appear in the first hour of the trading day. Often the stocks will move in after market and pre-market trading causing a jump or drop in the stock price compared to the previous day’s closing price. This change in price is one of the main reasons that stock trading is so volatile in the first hour or so. The market will correct the new price or it could be a sign of a stock on the move.
The last hour of trading is also wildly active. Many traders are exiting positions for the day to settle accounts, especially the big money traders and managed money funds. While there is quite a bit of movement in the late part of the day, it is not my preferred time to trade simply because I haven’t had nearly the success trading at this time. If you haven’t opened a practice stock account, I recommend opening one before depositing your money into an account. Get used to the software and how to place different trades. Give the early morning trading hours a try and I’m sure you will not be disappointed.