When to invest in the stock market?

Jitanchandra Solanki Mar 26, 2024 13 Min read

Did you know that one of the biggest fears for many traders and investors around the world is picking the wrong time to invest in the stock market? After all, the timing of your purchase can ultimately have a huge impact on your overall profit or loss. However, the process of knowing when to invest in the stock market can actually be quite simple, as you are about to discover.

In this article, you will learn some of the best times to invest in the stock market, how to use specific tools to help you know when to invest in stocks, why now could actually be the best time for you to get started and how you could start to invest in the stock market today!

What is the stock market?

The 'stock market' is a term used to describe a place where stocks and shares of public companies are traded. In the early days, these markets may have been found in the local village market square. Nowadays, stock markets are operated by stock exchanges.

For example, public companies such as Apple, BP and Facebook list their shares on the stock market through a stock exchange such as the New York Stock Exchange or the London Stock Exchange. The exchange helps to facilitate the buying and selling of shares and keeps track of the supply and demand of a company's listed shares which, in effect, determines the price of it.

Learning the influences on the supply and demand of a company's shares can help in identifying some of the best times to invest in the stock market.

When is the best time to invest in the stock market?

One of the biggest reasons individuals invest in the stock market is the hope that their investment will rise in value. The ideal scenario is to buy shares in a company at a low price and then - if the overall demand for shares has increased - sell it to someone else at a higher price. Your broker, such as Admirals, helps to facilitate this transaction as their technology will help route your buy or sell orders to the stock exchange.

So, the key to answering the common question of 'how to know when to invest in stocks?', lies in identifying what causes a change in demand. There are many situations which influence the demand for stocks but there are three major ones you need to know about.

#1 Stock Market Opening Hours

Every stock market around the world has certain opening and closing times. This means that if an investor wants to buy or sell shares in a company, they have to wait until the market opens. If a major market-moving event happens while markets are closed, the stock market's open can often be very volatile causing large price swings. This is because it is the first time investors can transact for the day.

Knowing when to invest in stock markets means knowing when the stock market opens and closes. Here are the times for a few of the world's biggest stock markets:

New York Stock Exchange: 9.30am - 4pm local time.
London Stock Exchange: 8am - 4.30pm local time.
Tokyo Stock Exchange: 9am - 3pm local time, with lunch period 11.30am to 12.30pm.

Many active investors, or short-term stock market traders, will focus on trading and investing within the first few hours of the market opening as that is when the most amount of orders or transactions are likely to take place, thereby creating the most amount of price movement.

If you are ever in doubt on when a particular company is open for trading or investing, you can visit the Admirals Contract Specifications page, which will show the trading times for your selected market, as shown below:

In the example above, the contract specifications page gives a lot of details regarding the trading of Royal Dutch Shell shares with Admirals. At the bottom, it also states the Trading Schedule based on the Eastern European Time zone (EET). This may prove to be very useful information as, with Admirals, you can invest in companies from 15 of the largest stock exchanges in the world - and how do you do this? It's simple!

The Admirals Invest.MT5 account allows you to invest in over 4,000 shares online, all from the MetaTrader trading platform. Find out more by clicking the banner below:

#2 Economic Events And News Announcements

Every day there are a variety of economic events and news announcements that can affect the demand of shares in a company. Typically, any company-specific announcements will have the greatest effect on a company's share price.

For example, the announcement of a new product launch, a rise in sales, or a positive earnings report may encourage investors to buy more shares of the company. Conversely, any bad news relating to sales, product recalls, scandals, accounting errors and so on, may cause investors to exit some - or all - of their positions. In both situations, the demand for the company's shares may be affected resulting in significant price movement.

Take a look at the 5-minute price chart of Apple shares on the 31 July 2019 from the Admirals MetaTrader 5 trading platform:

Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admirals (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

The company released a positive second-quarter earnings report on 30 July 2019, after the market was closed. When the market opened the next day the demand of shares was so high (meaning a lot of traders and investors wanted to buy more Apple stock) the price surged higher.

Other economic news announcements can also have an effect on the demand for a company's share price. For example, the decision of a central bank to increase or cut interest rates can have a broad impact on a country's stock market, thereby affecting individual stocks or shares.

So where can you stay up to date with all the latest news items for a particular company? Well, both demo and live account holders with Admirals can access the exclusive Premium Analytics dashboard directly from their Trader's Room after logging in, as shown below:

Source: The Premium Analytics dashboard, exclusively for Admirals users.

In the above screenshot, the Premium Analytics dashboard shows just some of the information traders and investors have access to including Market News, Instrument News, Market State, Market Research Terminal, Economic Calendar, Corporate Calendar and Technical Insight. The news section is only available to live account holder but this level of information could prove to be useful in understanding how to know when to invest in stocks.

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#3 The Economic & Business Cycle

Did you know that world economies naturally fluctuate between periods of growth (expansion) and contraction (recession)? One example is the 2008 financial crisis during which global economies contracted and stayed in a recession. Most major economies went on to recover to produce a period of huge growth. For example, the US stock market, just 10 years after the financial recession, was trading at all-time record highs.

Many longer-term investors aim to purchase companies that tend to perform well in the growth, or expansion phase, such as technology or energy-related companies. However, in a downturn, or a recession, longer-term investors may consider defensive companies such as utility and healthcare companies. This is typically known as 'sector rotation' where investors will analyse the economic and business cycle to try and invest in the stock market at the best possible time.

Is it a good time to invest in the stock market?

The chart below shows the historical price of the S&P 500 Index. This particular market is used to broadly track the performance of the largest 500 companies listed on the New York Stock Exchange. As you may see, the stock market has experienced periods of rising prices (growth) and periods of falling prices (contraction).

Source: Admirals MetaTrader 5, SP500, Weekly - Data range: from May 22, 2005, to July 31, 2019, accessed on July 31, 2019, at 9:08 pm BST. - Please note: Past performance is not a reliable indicator of future results.

As prices rise more investors tend to initiate long positions to capitalise on the rising market. One way they can do this is to buy physical shares in a company and actually own a small piece of it. During periods of contraction, there is also the possibility of using specialised trading products such as Contracts for Difference, or CFDs, to 'short' a company to potentially profit from a falling market. With Admirals you have access to a multitude of investing and trading products.

With access to global markets truly at your fingertips, there are now more potential trading opportunities available than ever before. This is because traders can access European, Asian and US stock markets, as well as other types of markets, all from their laptop or computer.

By understanding the situations which influence the best times to invest in the stock market (stock market opening hours, economic events and news announcements and an understanding of the economic cycle), traders can then take it one step further using other tools such as technical analysis or fundamental analysis to help in deciding if it is a good time to invest in the stock market.

If you are interested in developing further skills to help you in deciding when to invest in the stock market, then register for the FREE Admirals Zero to Hero 21-day trading course where you will learn:

Technical and fundamental analysis.
Techniques for real-time and real market conditions.
The mindset, attitude and tools to become a successful trader.
A trading strategy with 20 video sessions from a professional trader.

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Learn to trade in 20 days, from set-up to execution

You can also read on to learn how you can start to invest in the stock market online and some of the unique benefits with investing with Admirals you will definitely want to know about!

How can you invest in the stock market online with Admirals?

Knowing how to invest in the stock market online may seem daunting at first. However, it can be done in just a few simple steps. After opening a live, or demo trading account, simply open your MetaTrader 4 or MetaTrader 5 trading platform and you can start to access a wide variety of stock market indices as well as individual stocks from 15 global stock exchanges.

By selecting your Market Watch window (Ctrl + M, or View -> Market Watch tab) you can view all the available markets to trade on, as shown below:

Once you've selected the market you want to trade, it's just one more step to place a trade on it. Simply right-click on the chart, select Trading and then New Order which brings up your trading ticket, as shown below:

Why invest in the stock market with Admirals?

Trading with Admirals offers a variety of unique features and benefits for both short-term and longer-term traders.

For example, traders and investors may enjoy some of the features of an Trade.MT4 account which offers benefits such as the ability to:

Trade on share CFDs which allows users to trade on margin which means you only need a small deposit to control a larger position.
Buy and 'short' stocks meaning you could potentially profit from rising and falling markets.
Use the globally recognised MetaTrader 4 and MetaTrader 5 trading platforms with the exclusive Admirals Supreme Edition plugin offering advanced trading orders, correlation matrix, sentiment trader tools and more.

However, if you are also thinking of taking a long-term view of the stock market and would like to invest in public companies from around the world, you may consider the Invest.MT5 account where you can enjoy benefits such as:

The ability to invest in thousands of stocks and ETFs from 15 of the largest stock exchanges in the world.
Open an account with just €1 minimum deposit and invest from just $0.01 per share with minimum transaction fees of just $1 on US stocks.
Receive free real-time market data, with no delays, at no extra cost.
Create a stream of passive income by collecting dividend payouts.
Use the world-renowned MetaTrader 5 multi-asset class trading platform.

You can get started right now by clicking the banner below and enjoying all of the features above and more!

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About Admirals

Admirals is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Jitanchandra is a financial markets author with more than 15 years experience trading currencies, indices and US equities. He is an accredited Market Technician with a BA Hons degree.