Don’t Sell or Buy Your Investments on This Day of the Week
Written by
Gina Hagler
Edited by
Travis Woods
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If you’re new to investing, you might think that certain days of the week are better than others to buy and sell.
According to Advanced Trading Analytical Software (ATAS), Monday is generally a day to avoid because trading is comparatively inactive versus the rest of the week. ATAS further explains that Friday tends to see low liquidity, and it isn’t prudent to take on risk just before the weekend, lest you suffer a rude awakening the following Monday. In this sense, Friday is worse for trading than Monday. There is also some context to consider when trading. It’s recommended for beginner traders to avoid doing so before or after important news that affects the market — interest rates or non-farm payroll (NFP).
Not Everyone Agrees
It’s worth noting that not everyone recommends putting much “stock” into the notion of day-of-the-week investing strategies, as stated by Chase. Instead, it’s suggested that you consult a financial advisor. The argument against the strategy is based on the lack of long-term evidence in support of a day(s) being especially volatile. There are several factors that are unpredictable and not tied to day of the week, like world events, holidays or economic uncertainties. The fact that asking different sources will provide you with inconsistent advice suggests avoiding the strategy altogether. Some believe in the Monday Effect — the tendency for the stock market to drop on Mondays — which conflicts with the advice from ATAS. Conversely, Benzinga says the effect has disappeared over the last 10 years, which speaks to the idea of the inconsistency and unpredictability of the market.
Go With Research
Benzinga argues that day-of-the-week strategies should not trump individual market analysis or company research. They say that suggestions about what day to trade should be taken as a generalization rather than something calling for strict adherence. Ultimately, if a particular trend was to catch on to the masses, exploitation would result in its effect diminishing.
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