Stock Trading Timetable

Having a successful trading career not only depends on the trading system or style that is used but also depends on other intangibles, such as day trading time zones. Understanding the market dynamics during different times of the day will take anyones trading to the next level. What a day trader must understand is that even if a chart has a great setup, the time at which the trade is placed may be in a day trading time zone which typically starts a counter trend move. For example, many traders who are day trading breakouts will be far more successful during the first two hours of the day than any other time frame during the day. Typically breakout attempts will fail and reverse which will only serve to frustrate the trader and cause you to doubt your approach to trading. Let’s now take a look at the different time zones and understand the general market dynamics during each time zone.

First 20 min period

The first 20 minutes of the day are the most volatile of the trading day. While this is the most dangerous day trading time zone, it can also provide to be the most lucrative if you have a strategy in this time frame. It is usually recommended that beginner traders stay out of this zone and wait for the imbalances created from overnight news or earnings releases to settle down. Many indicators do not work well in this time frame as the volatility is too strong. In most cases, volume will also be the highest of the day during this time.

Reversal zone

The first reversal zone of the day begins at around 9:50am and lasts for about 20 minutes. Day traders need to pay close attention to this time frame. Many traders will put on continuation trades, or buy stocks which set new 30-minute highs and short stocks setting new 30-minute lows. Once the dust has settled from the opening, you will be able to more clearly see what the traders in this security will want to do.

Volatility shrinks

During this day trading time zone (10-10:30), volatility shrinks again and you want to look for clues in the Dow, S&P, and Nasdaq as to the direction that the market wants to take. This is an opportunity for bigger traders to move the market the way they choose. Watch the news of the stocks that you track for any indications of direction. The market will be settled for the most part and most of the days volatility will have passed.

Cashing out

There may have been a few reversals in the first hour but during this small zone (10:30-10:45), many traders will cash out of profitable positions and finish the day while others will position themselves for the next move in the market.

Lunch time

Lunchtime trading (11:00am – 2:15pm) can be brutal. The risk to reward is very high here. Volume will fall out of the market as floor traders and other institutional traders will take their lunches Dont let this time zone turn profitable morning into a loss.