According to historical research, some days of the week have proved themselves better than the other days for buying and selling of shares. Since stocks and stock markets are subjects related to economy and finance, they lack the potential of being scientifically verified. These patterns or conditions may not be accurate in showing the broader market conditions or its real representation.
Best & Worst Weekdays For Trading In Stocks
The day of the week effect might differ with the change in the current market situation or share related condition, but they do demonstrate and indicate some better and worse days in a week to trade in shares. These bad and good days conform to the pre-established long term pattern of the shares in accordance with their place and logical time.
The ‘Day of the week effect.’
The stock market is full of trends and changing patterns. Volume 25, 2001 journal of finance and economics states that those days of the week have different volatility in the movement of price. It also states that the level of daily returns is also not at the same level. The collection of data is from the research of 500 stock indexes between the years 1973 to 1997.
The study showed that Wednesday presented up to be the day that gives the best returns, and Mondays and Fridays presented the highest volatility along with the lowest returns. If such is the case, then it is clear that Mondays or Fridays might be the best days to buy shares, and Wednesdays might prove to be the best day to sell the shares to gain the highest returns.
Change in pattern with the change in time
All the above findings might seem interesting as well as quite convincing, but there is a big question for being absolutely true. All these calculated between the time period of 1973 to 1997, which shows a longer market timeline.
According to a book named ‘Stock Market Rules’, markets tend to rise on Fridays and drop on Mondays. The data this book has collected shows a timeline of 37 years beginning from 1953 till the year 1989. The book also states that this pattern of declining Mondays changed in the 1990s. It came out as a counterclaim to the day of the week pattern effect.
Different trends across different markets
Different research and studies show different results. And because these conditions differ, it becomes difficult to prove anything that could be universally accurate. Before coming to a conclusion over one research on ‘day of the week effect,’ it would be wise and helpful to consult other similar or related reports. Research by the economics department of Gazi University found that the markets across the globe vary, indicating that there is no such good day or bad day to buy shares and sell shares.
Also Read: 10 Best Demat and Trading Account in India
In short, if the investors trade in a short-term pattern, where he recognizes the movement of the price and accordingly buys or sells shares, that particular day might turn out to be the best or worse for him. There is no shortcut or trick in concluding the market conditions as the market varies with change in trend or due to different market conditions. No research techniques can measure this change accurately.
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