What Is the Right Moment to Invest in Online Trading?

What Is the Right Moment to Invest in Online Trading?

Anas Bouargane 06/08/2020 3
What Is the Right Moment to Invest in Online Trading?

Online trading has enabled people with a computer, good financial history, and enough money to invest in online markets.

Best Time to Trade in Forex Markets

With numerous platforms and a wealth of information on the internet trading, there are better chances of making money with fewer risks. As much as online trading is easily accessible, it does not mean you should take it lightly. Each trading platform has its ups and downs, and the knowledge and skills required to make profits.

Unlike traditional investments, online trading has a short-term focus. Buyers want to get returns within a few days, a week, or a few months. Day trading has the shortest time frame, with its analysis broken down into seconds, minutes, and hours. For online trading, the time of the day you trade is one factor that determines your venture's success. New traders often ask, "Is there a best moment to sell or buy stock?" Well, you are about to find out.

1. Best Time to Trade in Forex Markets

Most first-time traders jump right into forex trading and trade on every release of data. This strategy can deplete the trader's reserves very fast and burn out his persistence. This calls for the trader's understanding of the market hours for forex trading to have a more substantial chance of getting returns within a workable schedule. Unlike Wall Street, which operates on regular business hours, the forex market operates on the normal business hours for the four different time zones of the world, which means it runs day and night. 

The best trading hours are from 8 am to noon EST when the U.S. and London's market overlap. The Sydney and Tokyo market overlaps between 2 am, and 4 am. It is not as volatile as the U.S./London market, but it has some opportunities. Even though markets open and close during the day, that does not mean trading stops when a market closes. The ability to trade currency exists throughout the day. The difference is that the opportunities to get more profits are fewer.

2. When Markets Overlap

Market overlaps exist when two market exchanges are open at the same time. Though there are many foreign exchanges, the four mentioned earlier, New York, London, Tokyo, and Sydney, are the biggest and most important. During an overlap, most traders are active, meaning the markets are more volatile. Though online traders fear volatility, it provides price movements. When only one market is open, prices tend to stagnate. 

When Markets Overlap

3. When Stocks Go on Sale

Consumers are always looking for the best deal when they are shopping. During the Christmas season, Cyber Monday, and Black Friday, products are sold at a discount. This attracts many buyers but discourages investors. Online traders tend to avoid trading when the prices are low. 

The 2008 and 2009 financial breakdown was faced with a lot of pessimism from investors, but in the real sense, it was an excellent time for investors who picked up stocks at a low price. The time after the crash has always been the best time for investors to purchase at bargain prices. If stocks are oversold, investors can decide whether they are likely to rise in the future.

4. When the Stock is Undervalued

Many factors determine whether stocks are overpriced or undervalued. To assess the level of undervaluation, estimate the company's prospects for profits and growth. One of the leading valuation techniques is the Discounted Cash Flow analysis. It works by taking the company's projected cash flows and profits and then discounts them to the present using a relevant risk factor. The result of the discounted future profits and cash flow should be the ideal price target. If the current price is lower than this figure, then it is a good buy for investors. Other valuation techniques used by investors include looking into a company's dividend growth.

5. After Doing Your Homework

Relying on the advice of financial newsletters or analysts' price targets is an excellent place to start, but successful investors do their homework exercise due diligence when researching stocks. You can gain knowledge of analyzing stocks from companies' annual reports and other resources online. Companies' data is found on their corporate websites under the investor relations page.

 

To succeed in online trading, you have to know the right markets and moments to trade. The best time to trade online is when the markets are very active, which is when they overlap. Traders hoping to make more profits should aim to trade when the markets are volatile. Before diving into online trading, do your homework and understand how online trading works.

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  • Leigh Elizabeth

    Start now before it's too late !

  • Josh Murray

    I like online trading but it's stressful.....

  • Matthew Johnson

    Fair enough

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Anas Bouargane

Business Expert

Anas is the founder of CEF Académie, a platform that provides guidance and support for those willing to study in France. He previously interned at AlphaSense. Anas holds a bachelor degree in applied economics from the University Paris Sud.

   

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