April 22, 2024


General Evolution

When is the right time to buy and sell stocks in Australia?

Best Time(s) of Day, Week, and Month to Trade Stocks

“Buy low and sell high” is a common investing mantra, but sometimes it can be challenging to predict the stock’s price at a given date in the future. However, research shows that some functional patterns can help investors decipher when they should buy or sell.

One vital thing to remember is that not all stocks are created equal. A stock’s price will go up and down based on its overall performance compared to other companies within the same sector. Stocks in one industry can be affected by entirely different events than those in another industry, so investors need to study each one closely before placing their bets.

Investors who do this correctly tend to outperform those who buy whatever looks good when they decide it’s time for a flip. Of course, there is no guarantee with any investment. Nothing is ever set in stone, but looking out over more extended periods shows how much more return you can expect if you sell low instead of trying to chase every single price fluctuation.

Best months in the year to buy stocks

The research shows that many individual stocks tend to do better in specific months of the year. January and February are the leading time to buy stocks, while July and August are when you should sell them. It holds in both the USA and in Australia. Many even named February as a prime month for buying value stocks (expensive stocks with low future expectations).

Sell when your stocks pay dividends

Stocks that pay high dividends may seem like a great opportunity, but they over-value the stock, and you will raise the stock’s price by selling it at its dividend rate. Instead of just holding onto dividend-paying stocks until they crash, try to sell them about six months before their next round of dividends is due to be paid. This way, you will receive more than what they are worth and can use the extra cash for buying other stocks instead.

Watch out for times when there aren’t any new announcements

Many investors tend to avoid selling if there is an important announcement regarding a company’s future coming up, such as during earnings report season (quarterly) or by waiting to see if a company will be purchased. Avoid buying and selling stocks during these times because the price will likely change dramatically as more information is revealed or withheld right before an event is scheduled.

Sell during earnings report season

There is a definite pattern that stocks have followed during earnings report season, which lasts from the middle of May through October. When a company releases their quarterly report, stock prices tend to fall by about 1.5% on average and stay down for an extra two weeks after the official date of the report’s release. It means you should try selling your stocks during this time for maximum gain.

Best times of the day

Finally, choosing the right time during the day may be just as important to consider when buying and selling stocks. If you choose the optimal time to buy or sell, your success rate can increase substantially. Many professionals try to avoid trading right after the opening bell rings because many other investors are also making trades at once, pushing prices up temporarily. It would be best to try waiting until about one hour after the opening bell to make any high-value trades for maximum results.

Another best time of day is around 9:30-10 am each morning (Australian Eastern Standard Time) because that’s when many large companies like to release big news that directly affects their stock price performance – similar to earnings report season above.

Make sure not to trade too late in the afternoon either, because this is when many professional traders end their workday and stop actively trading for the day.

For sell orders, try to place them right before the opening bell because that is when prices are most probable to be at their lowest, and you will get more stock for your money. However, don’t be too attached to trying this because there is no guarantee that stocks will behave as expected during every market open. Have a look at the Saxo markets for an idea of how they fluctuate.

The ideal time to buy or sell stock in Australia may not exist, but understanding these major patterns can help increase profits.