When to buy and sell stocks

Michael Turner
July 20, 2022

Intro

What is the best time to buy shares on the stock market

How to decide when to sell stocks

When not to sell stocks

Order types

Timing strategies on when to buy and sell stocks

Bottom line

When making decisions on investing in the stock market, the question inevitably arises: when is the best time to buy stocks? As is often the case when discussing the investment world, it is worth listening to what Warren Buffett, one of the best-known investors in the world, has to say on the matter:

“The best time to invest is several years ago. The second-best time is now. The sooner you get in the better. Don’t wait to buy stocks. Buy stocks and wait.”

Nevertheless, don’t forget that buying stocks straight away may not be the best choice for you. The first steps in stock investing are always crucial, and should involve doing research and clearly setting your goals.

When to buy and sell stocks

What is the best time to buy shares on the stock market?

If you are a beginner, you don’t want to start off with a bad experience and suffer big losses on your first trades, so do some careful planning before you jump in. But remember that even if you pick a bad time (for example right before a big stock market drop), in the long term, markets always tend to rebound and you have a good chance of regaining your losses.

Statistics show that if you invested all your money in an S&P 500 Index fund at the start of this century, your average annual return would come to around 6% over the past 20+ years. This period includes several huge crashes and periods of gain, including the dot-com bubble, the 2008 recession, and the bull market of the 2010s.

Is There a Perfect Time to Buy Stocks?

For long-term investors—often referred to as buy-and-hold participants—there is a broad agreement that the timing of entry is far less critical than many assume. Trying to perfectly “buy low and sell high” is extremely difficult, and short-term price fluctuations—whether daily or weekly—tend to have minimal impact when viewed over a horizon of 10, 20, or even 40 years. If your strategy is focused on long-term growth, getting started sooner rather than later is usually the more important decision.

Even in periods when the broader market is declining, opportunities still exist. Certain stocks may trade below their intrinsic value, offering attractive entry points for disciplined investors. The key lies in conducting thorough research and identifying these undervalued assets. As legendary investor Warren Buffett famously noted, his focus has never been on predicting market movements, but rather on uncovering fundamentally strong companies trading at favorable prices.

Ultimately, while timing can play a role, it is not the determining factor behind investment success. If a stock appears attractively priced based on solid analysis, it can still be a worthwhile purchase—even if short-term volatility leads to temporary declines. Confidence in your research and a long-term perspective are what truly matter.

It’s also important to remember that stock markets are inherently cyclical. Prices rise and fall, and corrections—typically defined as declines of 10–20%—occur regularly, often about once per year. Rather than fearing these pullbacks, investors can view them as opportunities to acquire quality stocks at discounted prices.

When to buy and sell stocks

How to decide when to sell stocks

Selling is just as important a part of trading as buying. Your overall investment strategy should therefore place adequate emphasis not just on the buying part of the equation, but also on when you plan to sell an asset. Below are some factors to consider when thinking about the timing of when to sell stock.

Reasons you might sell shares:

Declining performance. If a stock is not performing as well as you expected, or perhaps the most recent earnings report shows that its fundamentals have become worse, it may be a good time to sell.
Portfolio adjustment. You may feel that your money could bring higher returns in another asset than the one it is tied down in right now. In that case, selling could be a good decision to rearrange your investment portfolio to make your money work for you better (this is called opportunity cost).
Target price reached. If you had a specific target in mind when buying the stock as to when you would sell it, it is advisable to sell it when it has reached this price level. If your research was thorough and your price target was based on valuation levels, hitting that target means the stock is now overvalued and it is ready to sell.
Personal reasons. You may decide that you need the money currently sitting in stocks for a personal expenditure, e.g. buying a home or car, or for retirement.
Tax purposes. Based on the time of year (e.g. the end of the tax year) and your profit or loss positions, it may be a good decision to sell a stock in order to optimize your capital gains taxes.

When to buy and sell stocks

When not to sell stocks

Knowing when to sell is important, but knowing when not to sell is also crucial. The key here is to try to tune out the immediate market noise and your emotional reflexes, and concentrate on the fundamentals of the stock, as well as your investment strategy. You have to accept that you will never be able to time the market perfectly, meaning buying at the lowest possible price and selling at the highest point. If short-term changes and volatile market movements are causing you stress, you should consider that maybe long-term investing is a better option for you.

When to buy and sell stocks

Order types

For both buying and selling stocks, it is also recommended that you familiarize yourself with the different order types available (such as market order, limit order, stop-loss order, and others), to determine which one is the best for your purposes. Read more on this topic in our article on order types.

When to buy and sell stocks

Timing strategies on when to buy and sell stocks

Over the years, many traders’ wisdoms have been formulated, based on historical patterns, on when the best periods of the day, week, month and year are to buy and sell stocks. We delve into these below; however, you should take them with a grain of salt. Many are supported only by anecdotal evidence.

Also, remember that past performance is not an indicator of future results, so you should do your own analysis to determine the best time for your trades. In general, higher market liquidity and volatility present more opportunities for potential profits – but also a higher risk of losses.

Best time of day to buy and sell stocks

There are some conventional wisdoms about what the best time of the day is to buy and sell stocks. This holds that in general, the first and last hours of trading are the most favorable times for trading, due to increased volatility and higher volumes. These periods usually see bigger price movements, which open the way for bigger profit opportunities.

However, it depends on what your goal and trading strategy is – if you want to buy stocks to hold them for a long time, it doesn’t really matter what time of day you buy or sell. But if you are a day trader or want to hold stocks for just a couple of days or weeks, then catching the right hour for buying and selling could translate into bigger returns.

The best time of day to buy and sell shares is thought to be in the morning, in the first couple of hours after markets open, and during the last hour of trading. In the morning, the market usually reacts to the news that has come out since the previous day’s close, factoring it into the stock price. Meanwhile, trading generally heats up in the last hour of the day, as day traders look to close their positions.
These periods often come with high trading volumes as well as high volatility, which day traders prefer. However, if you are a beginner, you should avoid trading during these hours for the same reason, as big price swings are more frequent.
During the course of the day, trading volume and volatility tend to flatten out and stock prices stabilize somewhat, making this the best time for inexperienced traders to buy and sell stocks.

Keep in mind that different markets around the world are open at different times, so make sure you know what the ‘best time’ means for your time zone. For example, US markets are open between 9:30 a.m. and 4 p.m. EST. – link to trading times

Best day of the week to buy and sell stocks

Some brokers believe that there are certain days of the week that are better for buying and selling stocks. However, much of the evidence is anecdotal and does not hold up to closer scrutiny when looking at historical data, especially for the last 50 years or so.

Nevertheless, Monday is thought to be the best day of the week to buy shares on the stock market. This “Monday effect” or “weekend effect” is based on the theory that the market on Monday generally follows the trend of the previous Friday – if it was up then, it will continue to rise, while if it was trending down, the decline will continue. This offers traders an opportunity to ride these trends. Trading volume and volatility is also usually higher than usual on Monday.
Some traders subscribe to the school of thought that markets usually dip on Monday, which in this scenario means it is a good day to buy shares of undervalued companies at a lower share price.
On the flipside, the consensus tends to consider Friday to be the best day of the week to sell stocks. This is based on the belief that markets usually trend upward during the course of the week, peaking on Fridays. Also, many find it advisable to sell on the last day of the week, believing that bad news tend to come out on Friday night or over the weekend, to which the market will react only on Monday.

Best time of the month to buy and sell stocks

There seems to be even less agreement on whether there is an optimal time within a month to buy or sell shares. One term that usually comes up in this context is the “pay day effect”.

This holds that trading activity in general increases around the time when people get their monthly pay, usually near the end or beginning of the month. The theory goes that with the added cash, traders’ interest in stocks rises at this time, which may drive up share prices.

Conversely, there is a belief among some traders that share prices are usually lower around the midpoint of each month, making this a good time to buy stocks. Coupled with the opinion that a stock price generally goes up during the course of the month, there is a stock trading strategy that recommends buying your preferred instrument near the middle of the month (between the 10th-15th) and selling it at the end of the month.

Best month to buy and sell stocks

There are also several adages and hypotheses about which months of the year are the best for trading stocks. Traditionally, it was thought that the best months of the year for buying and selling shares were in the period from the end of October to the beginning of May. However, in today’s market environment there is little evidence anymore to support these theories.

Let’s take a look at some common conceptions:

“Sell in May and go away”: probably the best-known advice in this area. Historically, it is based on the thinking that most wealthy investors and traders would leave London or New York as summer approaches, spending their vacation abroad, where it would be harder to monitor their finances. So they would sell their stocks and holdings beforehand, causing a slump in the market that would persist until the end of summer. You can see why in today’s world of permanently being online anywhere around the world, this no longer applies or makes sense.
“Halloween effect”: this is based on the hypothesis that the stock market performs better in the period between October 31 (Halloween) and May 1 than in the May-to-October period. This has led many to follow the strategy of buying stocks in November and holding them until the end of April, before arriving at the above-mentioned “sell in May and go away” stage.
“Santa Claus rally”: as the name suggests, this thinking posits that stocks generally rally in the period leading up to Christmas at the end of December and into the new year. There are many theories as to what is behind this, including the positive holiday mood, the spending of end-year bonuses, or institutional investors staying off the market at this time, leaving the floor to generally more optimistic retail investors.
“January effect”: with the start of the New Year, there is often an upward rally in share prices. As the end of the year approaches, some investors usually sell some stocks for tax purposes. This presents a buying opportunity for others, which, coupled with optimism for the new year, leads to increased stock prices in January – or so the reasoning goes.

When to buy and sell stocks

Bottom line

To sum up, the most important thing when investing in stocks is doing proper research. Use the educational resources of online brokers or other brokerage services to find stocks and companies that represent true value and have a reliable business that will generate long-term returns. That is what you should focus on, rather than exactly what time of day, which day of the week or month, or which month of the year to buy and sell stocks.

Related articles:

How to buy shares online
How to choose an online broker
How to decide which shares to buy
How to choose your stock order type
Where to buy stocks

When to buy and sell stocks

What is the best time to buy shares on the stock market?

How to decide when to sell stocks

When not to sell stocks

Order types

Timing strategies on when to buy and sell stocks

Best time of day to buy and sell stocks

Best day of the week to buy and sell stocks

Best time of the month to buy and sell stocks

Best month to buy and sell stocks

Bottom line

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