4 Ways to Know When Is The Best Time To Day Trade Options
When I first start day trading options, I was executing calls & puts almost all hours of the day. There was a big problem with that, executing a trade midday was causing me to lose so much money value on my contract because volume is not high enough to move the stock in a clear direction. So my question became, what’s the best time to trade options in the day?
Let’s dive into the best times to day trade.
The 4 Best Times to Day Trade
1. Trade During the Most Volatile Times of the Day
One of the best time to day trade is when their’s volatility in the market. This is fancy way of saying that you need price action to fluctuate over a short-period of time.
Volatility can be a double-edged sword for day trading. On one hand, it can create massive opportunities that can lead you to make so much money. On the other hand, it can also create a lot of risk, making price action hard to predict.
Typically, the first and last hour of market hours are the most volatile timeframes.
2. Trade When There’s a lot of Volume
As a day trader, another important factor is volume. You need a lot of buyers and sellers in the stock you’re day trading, for your profits to flow in smoothly.
3. Trade When Theirs a Clear Trading Plan
Nothing is worst for a day trader, then jumping into a trade blindly. This is the equivalent to a hiker going hiking without a map.
You need to make sure you’re aware of strong levels of supply and demand zones, so you can have an idea where your entry and exit will be for a day trade.
Without a clear trading plan, do not even consider day trading.
4. Trade When You’re Confident and In Control
90% of traders fail because they get too emotionally invested in a trade. When you’re trading with you emotions such as stressed you’re bound to make silly mistakes that you will regret later.
Many traders take serious losses, and then want to use the remaining capital to revenge trade, only to set themselves up for failure again.
Moments like these, it’s best to avoid day trading when you’re feeling stress and emotional.
5. Event-Driven Trading
There are times, where events may happen in the middle of a day for a company. This could potentially lead to a huge spike in volume and volatility for the stock.
But I want to show you, how the $SPY reacts to an event such as July 2022, FOMC release at 2:30 p.m. ET (Eastern Time).
You can see, that a huge spike in volume increased from 2:30 p.m. ET (Eastern Time) all the way till the end of the day in the market.
So, it’s important to be familiar with any events that may be coming for the stocks that your in, because it could have a drastic change in your trade.
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