Recent statistics reveal there are 9.6 million traders around the world. Further, 12% of all day trading activities are by profitable traders.
If you want to make money with stock trading, the first step is to familiarize yourself with how it works and the best practices. The more research you do before purchasing a stock, the better.
Not only that, but you must understand what the 10 a.m. rule in stock trading is. Using this one tip could prevent you from losing money on a trade. Here is why.
The 10 A.M. Rule in Stock Trading
This rule says that an investor should never trade stocks at 10:00 in the morning. That is because, at this time of day, pricing is highly volatile. It is best to wait until later to better understand how a stock will perform.
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Why it Matters
It protects investors from making an error when purchasing a stock or selling equities. It also helps them to make a profitable trade. You won’t have enough information to make an educated decision at 10 A.M.
One way to adhere to this rule is to stop all trades at 10 A.M. Another option is to limit trading to after 10 A.M. Only trades after you see the market has an opportunity to stabilize.
What About the Afternoon?
The last hour of trading hours sees a lot of activity. Investors are looking to capitalize on trends. Since there is a lot of movement, profits have tremendous potential.
Best Day of the Week
Lately, the best days are negligible. However, Mondays and Fridays can be more erratic for stock buys versus the middle of the week. That is because Mondays can be affected by weekend news.
Best Time of the Month
Typically, stocks are higher at the start and end of the month. One reason is that this is the regular cycle for money to be directed by mutual fund managers into their funds. Because of this, many investors are looking to sell the last five days of the calendar month.
Other Important Rules For Profitable Trades
Especially if you are considering becoming a day trader, there are many factors to keep in mind when trading. Use stop-loss orders. Also, do not trade funds you can’t afford to lose.
If you are scared or emotional, this is not a good time for stock trading. Make decisions and act with a clear mind.
There are other times experts recommend that you should not trade, too. Weekends and holidays, or days when the market is closed, are ill-advised. Stocks could have news pending that will impact prices, like an FDA announcement or earnings report.
How to Make a Profitable Trade
There are many brilliant tips to help you be successful in trading if you educate yourself. Knowing common trends in trading will help you make profits.
The 10 a.m. rule in stock trading is a popular one, therefore you must consider it when trading in the morning hours.
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