Not Exactly the 9 to 5…
In today’s intraday stock market schedule, a trader’s day can range from just a few minutes to more than 12 hours. Understanding the “schedule” of the market, in addition to key intraday reversal times, can make it much easier to find the best times to get in and get out as a day trader. Couple time related data with technical indicators, chart patterns, or any combination of strategies, and you’ve got a recipe for a nice cake. 🙂
Maybe you’re that research hound guy that’s up at the crack of dawn stalking your next prey, done trading and napping by noon. Perhaps a fly-by-the-seat-of-your-pants trader? A sheep trader that blindly follows others? Or maybe a late riser, who prefers to trade after the bond close at 3 p.m. into the after-hours market until 8 p.m? Or maybe you’re even the through-it-all guy that puts in 15 hours a day to mastering his craft. Maybe you’re not even a guy… maybe you’re a woman!
Whatever your trading style (and gender for that matter), these time frames will likely be useful to you. All times are shown in EST.
Intraday Stock Market Schedule
The Opening Bell – 9:30am to 9:50am
Potential Reversal Area 1
The first 5-20 minutes of trading are commonly the most volatile of the day. Although trading the open carries more risk than other time frames, it can also be extremely rewarding if you understand trading at this time of the day. Some technical indicators won’t provide accurate readings as a result of volatility being too strong. Very commonly volume is at it’s highest during this time. Keep in mind during the open: approximately 24% of all price reversals take place within the first minute of trading.
The Morning Reversal – 9:50am to 10:10am
Potential Reversal Area 2
Aside from the immediate open (9:30-9:35), the first major reversal zone starts at 9:50am and lasts for roughly 20 minutes. This is an important time of day for traders, as other traders are buying tickers that are setting new 30 min highs and shorting ones setting new 30 min lows. Others are playing retracements from gap plays.
After all of the drama from the open is over, it’s easier to see how specific tickers are trading. Volume typically drops off a bit, but still remains strong. This is a favorite of many as price action begins to stabilize but the volatility is still there for some nice set-ups.
Breather – 10:10am to 10:25am
A 15 minute period often referred to as the “breather,” this time frame is opportune for big traders (smart money) to move the market. Watch stocks that you track for any indications of direction during this time.
Morning Decision – 10:25am to 10:35am
Potential Reversal Area 3
At this point, price action will likely settle down and most of the volatility for the day will already have passed. It’s possible that there were several reversals in the first hour, which may influence certain traders to close their positions for profit and be done for the day while others may attempt to position themselves for the next move. This is a time of preparation and consolidation. The move that follows could potentially last until lunch.
Final Morning Move – 10:35am to 11:15am
This is generally the final major time frame of morning trading. This time involves less risk, in that technical indicators like RSI will be more effective than in earlier time frames. However, use caution as the end of the time frame leads directly into lunch.
Lunchtime – 11:15am – 2:15pm
Potential Reversal Area 4
Often referred to as “the lull,” lunchtime trading can be absolutely brutal in terms of action. Choppy sideways trading and false breakouts characterize this entire time frame well. If you trade the lull, consider light size until you develop consistency in this time frame.
As mentioned in the Intraday Reversal Times article, there are a several key reversal points during the lull that can be contributed to institution lunch hours beginning and ending (11:15, 12:00, 12:45, 1:30 and 2:15). The overall risk to reward is much higher here. Volume generally falls through the floor as both heavy retail traders and institutional traders take lunch. Don’t let the lull turn a great morning of trading into a red day.
Back to Work – 2:15pm – 3:00pm
Potential Reversal Area 5
By now, lunch is over and traders start to work their way back into the markets. Trends are typically established by now and trading during this period can provide valid opportunities for technical indicators to assist in trades. Keep in mind that the bond market closes at 3pm. As a result, pickup in volume is likely due to bond traders coming into the futures and equities markets.
Bond Close Gives Direction – 3:00pm – 3:10pm
Potential Reversal Area 6
The bond market closes and bond traders can, at times, flood the equities markets. Keep an eye out for quick moves in either direction. These moves can be fast or continue until the end of day. Many “EOD fades” and “EOD runs” manifest in this time frame due to this effect.
Nearing the Close – 3:10pm – 3:30pm
Stay with the Trend
During this time, the ideal move is to stay with the trend that was established from the 2:15 p.m. or 3:00 p.m. times, without being “married” to ticker. Odds are that the trend will continue, but watch for potential reversals.
Closing Bell/Re-balancing of Portfolios – 3:30pm – 4:01pm
Potential Reversal Area 7
Very rarely should one enter a position during the last half hour of the day, unless planning an overnight hold. One reason would be that there are numerous institutions and funds balancing their portfolios at this time, which can make a trader’s experience here tricky. If entering a day trade, you only have 30 minutes to exit the trade. Most would prefer not to trade under that pressure. However, if you like very short term trades or are just looking for an adrenaline rush at the EOD, the volatility is generally there for taking.
The above information is simply a guide, nothing further. No one is telling you that you shouldn’t trade at certain times, this is simply for you to understand what is going on the rest of the market at those times. Your style is your own, as are your trades. If trading the open works well for you, embrace it. For others, it may mean an ugly start that they spend the rest of the day trying to recover.
This intraday stock market schedule may help you in determining the best time of the day to trade. I hope this information assists you in your journey to successful trading. If you learned something valuable here, share it with others.