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How to know when to buy and sell stocks for trading?


When to buy and sell stocks is a common query that is asked by almost all traders and investors. More specifically, traders always want to know what is the best time to buy and sell stocks. In this article, you will learn some secret information to find out when to buy and sell stocks. So, carry on your reading.

Why does time matter for buying and selling stocks?

Right time to buy and sell stocks is an essential part of trading. A trader can’t make money unless he knows the best time to buy a stock and right time to sell this stock. Generally, traders trade trend reversal to win the trade.

A good stock helps to make your fortune if you can buy at bottom and sell at peak. To win trade for maximum time, you need to know when to buy and sell stocks.

Don’t worry. I have studied the market nearly one year and picked some time(s) to show you when to buy and sell stocks to win the trade. I have assigned 10 best time(s) to buy stocks at the first part of article. In the second part, you will learn another 10 best time(s) to sell stocks. So, continue your reading.

Before entering our main discussion, let’s introduce total process to win trading. These are bonus tips for how to know when to buy and sell stocks article readers.

Secret of winning trading

Trading is a risky business. It has some steps to win. First of all, you need to know the basics of stock market.

Secondly, you need to know trading strategies. If you are a day trader, you should learn about day trading strategies.

For swing trading, learn about how to pick stock for swing trading.

Thirdly, achieve knowledge about trading tools.

Fourthly, wait for when to buy and sell stocks for trading.

Finally, if you make trading mistakes, immediately you should apply stop loss rule.

However, let’s enter our main discussion

When to buy stocks

1. After record date

Simply, a good stock price continues to reach higher high before record date. After the record date effect, this uptrend price begins to touch 52 weeks lower.

This is the secret time to buy stock at lower price. To win the trade, you should free your cash earlier and follow some fundamentally strong companies. When price reaches the bottom line, you must buy stock.

Then, time to relax! Wait for few days to a month to see the outcome. When your holding will touch 20% to 30% gain, you should sell. Remember that a trader can easily make money in uptrend market.

But he fails to preserve capital in downtrend market unless he knows downtrend market trading strategies. Therefore, an experienced trader should wait for best time to buy stocks.

2. After Quarterly financial statement declaration

In many countries, a financial year is divided into four quarters. Similar to these patterns.

First Quarter – End on 30th September—Quarterly Financial Statements (QFS) is published in October’s Last or November’s First

June Closing Financial Year Companies declare dividend in October /November. Hence, market goes down in October/ November.

Second Quarter – End on 31th December—QFS is published in January’s Last/February’s First

Third Quarter – End on 31th March—QFS is published in April’s Last/May’s First

Fourth Quarter – End on 30th June—QFS is published in July’s Last/August’s First

In order to win the trade, you should wait for quarterly financial statement declaration time. Nearly, all companies declare financial statement at the end of every quarter.

You can take a chance when your targeted company’s financial statement has some variance.

As traders and investors compare one quarter’s performance to another, they sell out their holding if they are unhappy about companies’ quarterly performance.

So, wait for this chance. You can buy your prefer stock at lower price in this situation. Excessive sell pressure creates opportunity for some prudent traders.

3. After dividend declaration

Dividend declaration effect is the similar to record date effect. At the end of every financial year, all the listed companies declare dividend. June closing companies declare dividend in October or November.

Similarly, December closing companies declare dividend in March or April.  As listed company’s acts have scheduled a timeframe to declare dividend, company’s acts may vary from one country to another.

You should know the schedule earlier to wait for an opportunity. Generally, this timeframe is suitable for buying at low price.

4. Temporary under performance

Negative news impacts a good strong negatively. This is the opportunity for you. Warren Buffett, who bought shares from temporarily disaster companies and made his fortune by using this strategy.

Warren Buffett tips– a good company may under performance for any reason. And, this company will recover sooner or later. So, try to take this opportunity.

5. After continues price falling

After continues price falling for some days for a specific stock, its price may change its direction. You should buy at trade reversal points.

A stock price may fall for many reasons. In some cases, stock price manipulation is a big reason to downtrend price. Day traders and gamblers try to fall price for buying at lower price. Take your chance to buy with low price.

6. Price falling reached near 52 weeks lower

You should buy this stock, which price has just touched near 52 weeks lower. Every company’s stock touch the lower price in a year. You have to find out the opportunity to buy at lower price.

7. RSI below 30

Relative Strength Index (RSI) is a price movement indicator for a particular stock. You should learn about the best technical indicator: RSI to know when to buy and sell stocks.

To confirm the price movement, you can follow candlestick chart along with RSI indicator. RSI value below 30 indicates selling pressure for a particular stock. Excessive selling pressure means a suitable chance to buy at bargain prices.

8. Before good news/at the time of good news

In order to win in trading, you should study the market. More specifically, study the specific stock. Try to find out probable good news. Such as new business line, high business performance, new management and so on.

A trader always persists to catch a good news earlies. If you can buy before good news or at the time of good news, you can buy at cheap price.

9. Broad market index fall a certain level

Temporary economic instability or big declaration such as dividend declaration or record date declaration can downtrend the whole market. Covid-19 is a real example of broad market index falling. You need to buy when the situation starts to improve.

10.Time of High volume at falling price

In a particular day, any bad news can impact the specific stock. This situation may be temporary. Whenever you see a stock is moving downtrend with big volume, you need to find out the reason.

If you think the reason will vanish within a short time, you put buy order at bottom price. Perhaps, price will go uptrend in next trading day.

When to sell stocks

1. Before record date

Sell your holding before record date. Otherwise, your holding will fall into record date effect and you will make lose. Almost all stocks price fall after record date. So, avoid risk of losing money.

2. Before Quarterly financial statement declaration

After quarterly financial statement declaration of a stock, stock price will fall if this quarter performance is below the previous quarter. So, try to sell stock before announcing quarterly financial statement.

3. Before dividend declaration

Like record date effect, dividend declaration effect may negatively impact the stock price. In order to avoid losing money, you should sell stock and buy in return after dividend declaration effect.

4. Before bad news Declaration

If you can predict any bad news, you should sell your holding. When bad news affects the price, you can buy this stock again.

5. Before price starts to fall

Candlestick chart can show the price movement immediately. So, try to sell when price reverse the trend and start to go downtrend

6. Price high reached near 52 weeks higher

When price reaches at 52 weeks peak, you should careful about this stock. Price may reverse in downtrend and you will lose money. So, sell you holding early to avoid possible downtrend impact.

7. RSI above 70

RSI value above 70 indicates buying pressure. Excessive buying pressure indicates a selling pressure in near future. You should sell those stock which have reached more than 70 RSI value unless any good news to hold.

8. After good news/at the time of good news

Good news is a positive an indicator for uptrend price. Hold your holding till the good news brings the maximum benefit. At the end of good news impact, you should sell to take profit.

9. Broad market index reach danger level

Broad market index indicates the whole market overview. Continues index movement doesn’t mean that it will continue for indefinite time. So, observe the market carefully to figure out right time to sell.

10. Time of High volume at high price

High volume at high price indicates excessive buy pressure. After excessive pressure, this stock will face sell pressure. So, sell before excessive sell pressure starts to kill your profit.

In short

If you have read the whole article carefully, you have learnt the 10 significant time(s) to buy and sell stock. At the beginning, I have referred ultimate successful process to win trading. Read other article to achieve complete knowledge about trading.

Founder of The Financial Ask


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