When to Trade (and When NOT to Trade)

I often get asked: “What’s the best time of day to trade?”

Well, let me tell you a story…

For my first several years in the markets, I was a part-time trader.

Back then, I had to focus on trading at specific times of the day because I had a business to run (and young kids to take care of). 

At the time, it was tough. Time management was crucial. But I managed to figure out a schedule that worked well.

I did this by identifying what times of the day had the biggest, juiciest setups in individual stocks. Then I started trading at those times only.

More than two decades later, I’m still using the same schedule. The same rules apply. As Bruce Hornsby sang in the 1986 smash hit “The Way It Is” … “Some things never change.”

Or, as I like to say, S.S.D.D (Same Stuff, Different Day).

But enough about 80s tunes. Today, we’ll break down a typical trading day. Then, I’ll tell you what I think the best times of the day to trade are…

Pre-market (4 a.m. – 9:30 a.m. EST)

Let’s start by outlining the trading periods we’re gonna talk about today. 

First up, pre-market…

Now and then, there might be a stock that’s so attractive in pre-market that you feel like you have to trade it. 

That said, I don’t recommend trading before the opening bell. 

I’ve seen too many stocks look good in pre-market only for them to crash and burn as soon as the bell rang. 

Pre-market is a great time to watch, listen, and strategize. Identify plays that have the potential to run shortly after the bell rings.

For example: During pre-market last Friday, June 14, we singled out Kaival Brands Innovations Group Inc (NASDAQ: KAVL) because it was…

• Low float
• Heavily shorted
• Manipulated by chat rooms
• Up big in pre-market trading

This is when you should take notes, watch charts, build your watchlist, and prepare for the day ahead. 

But don’t go it alone — let’s do it together in Pre-Market Prep.

The 9:45 a.m. Window

My favorite time to trade is 9:45 a.m.

Before going further, I will say this: these are windows, okay? Even if I give a very precise time, there’s a window of opportunity there. 

It could be 9:36, it could be 10:15. The idea is to wait for the market to open and shake out.

If you’re new to trading, you might not know what I mean. But if you’ve been around for a while, you know that when that bell rings at 9:30, prices swing wildly and stocks get very choppy. 

Then, whether it be up or down, usually by about 9:45, prices start to stabilize and make some sort of trend.

In the Daily Income Trader community, we’re rarely pressing those buttons at exactly 9:30. 

We let the trade shake out, we let the trend form, and then we look for that reliable 9:45 move.

This is exactly what we did on KAVL on Friday, and sure enough, look when the stock started to surge…

The pink line is the market open and the orange line is the beginning of the 9:45 window. 

It’s no coincidence that the stock put in an enormous green candle at exactly 9:45.

Again, this is a reliable, repeatable, consistent pattern. And it doesn’t have to be right at 9:45. All you have to do is identify the play before it’s too late.

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The Dip and Rip Pattern

My favorite pattern is a dip and rip in a big pre-market gainer with news. 

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Over and over again, these big % gainers will dip into the open, then reclaim the uptrend into that 9:45 window. 

The nice thing about that is you’ve got a clearly defined stop-loss. You’re basically buying the breakout on the pre-market lows.

However, if you’re trading a momentum stock and it drops below the morning lows, you need to stop out. 

This is the advantage of having a stop-loss. It tells you “If you’re still in this stock, you’re crazy.” And that’s why I love trading off that morning low.

The 2 p.m. Window

My second favorite time to trade is the 2 p.m. window.

Again, it’s a window. But if you see a stock holding above VWAP into this afternoon window, that gives you a very high probability setup.

I love to see a big early gainer that holds steady into the last two hours of trading. 

Back to KAVL, this stock had a perfect 2 p.m. window move on Friday…

The second orange line is the 2 p.m. window. Had you simply waited 20 minutes for the stock to find support at $4.50, then gone long into the window…

You could’ve made a quick 86% in less than 90 minutes.*

If a stock had held above VWAP into the 2 p.m. window and then gets a volume spike, that’s a consistent setup that we look to trade literally every day. 

We call it the VWAP Hold High of Day pattern. It’s a reliable and consistently repeatable pattern with a clear risk level. 

But just like the Dip and Rip, if you don’t have a stop-loss … you’re not trading, you’re just “holding and hoping” for the best.

If the stock fails to break out and instead breaks back below VWAP, it’s time to cut the position. 

Stop out, move on, and look to make the next trade. The beauty is in the simplicity. 

And don’t sleep on Oracle Daily Alerts — Our FREE Wall Street-grade algorithm that delivers “One Minute Daily Stock Alerts” that can help you potentially pocket an extra 55% per trade…*

After-hours (4 p.m. – 8 p.m. EST)

Beyond some extreme outlier situations, after-hours trading should be avoided at all costs.

Similar to pre-market, after-hours trading is just too unpredictable. 

You will see some of the craziest moves after the market closes. Stocks rocket straight up, but then go all the way back down, and even go red. 

This is why I tell students to avoid after-hours and use pre-market for preparation. 

Wait for that dip and rip. Wait for that break to a new high of day around those 9:45 and 2 p.m. Windows. 

Rinse and repeat. Every single day.

Have a great day off, everyone. See you back here tomorrow. 

Tim Bohen

Lead Trainer, StocksToTrade

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