Best time of day to trade mutual funds
Do you want to know does the market timing concept work? Is there any empirical evidence that proves mutual best time of day to trade mutual funds have historically performed better on some days of the week than others?
Read on to learn which day of the week is the best day to buy mutual funds. This topic of when to buy stocks or mutual funds came up when I have a discussion with a friend whom I successfully introduced to the world of passive investing via index funds. He wanted to know what is the best day of the week to buy mutual funds? Obviously, the best day to buy mutual funds is when the price best time of day to trade mutual funds low. But which day of the week? So if you have to pick a day to buy mutual funds, would Monday is the best choice?
Hence that effect cancels out. If indeed the major stock market crashes always happen on Mondays, then it would be wise to always buy best time of day to trade mutual funds after the crashes. If Tuesday occurs right before the 15th or 30th of each month, should you buy in before other people get paid and part of their salaries go into their k mutual funds? As for Wednesday, in some random year the stocks gain more in value compared to other days of the week.
By now all the quantitative analysts quants and high frequency traders have studied any small variance in returns for what day of the week to buy or to sell stocks and mutual funds. If there really was a better day to buy funds, someone would arbitrage best time of day to trade mutual funds opportunity and it would go away. That means should you avoid buying high on Thursday and Friday? Also some traders might want to close out their positions by Friday to avoid the exposure to unnecessary and untradeable risk over the weekend.
These types of pricing abnormality have been arbitraged out of the market already. There are quantitative hedge funds that employed many PhD quants to search for these types of patterns constantly in the search for a quick profit. They look for reoccurring patterns and relationships in the prices of different mutual funds and act on it when their model tells them there is a miss-pricing.
Asking what day of the week to buy mutual funds is like asking when to get into the stock market. Nobody can predict the future but there are only five possible answers. So your best bet is to buy mutual funds today. Buying as early as possible is much better strategy than trying to timing which day of the week to buy mutual funds. Additionally, you cannot market time which day to buy mutual funds but you can avoid buying some dividend-paying funds right before they distribute their capital gains, especially when a large annual dividend is to be declared within a month.
But you still have to pay tax on the dividend. Investing is all about buying and holding for the long term. There is no statistical advantage of choosing one day versus another in a week. Over time your choice of when to buy mutual funds is completely irrelevant. So if you have money to invest in mutual funds, pick a day, any day of the week. Leave a Comment Cancel reply.