Should I buy or sell stocks during the opening and closing auctions only?

External question — Personal Finance Stack Exchange Author: Flux Original post: https://money.stackexchange.com/questions/140199 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. From what I see, there are a number of advantages of buying or selling stocks during the opening and closing auctions: Huge liquidity. The opening and closing auctions have the largest amount of liquidity of the entire trading day. No need to worry about my execution speed. All orders during the auction get resolved at the same time and at the same price. I don't have to worry about "missing the price" as a result of my slow internet connection. No need to worry too much about execution quality. Trading during the auctions completely avoids questions about payment for order flow. Psychologically, I avoid thinking too much about the time I place my order. I avoid thinking of (possibly irrational) things like: "I should have placed the order at 11am instead of 2pm". I can more easily ascribe the execution price to "fate" rather than "poor timing". The opening and closing auctions are fixed times with the aforementioned advantages, so I can confidently place my order and immediately get on with my day. Given these advantages, I have decided to completely avoid buying and selling during the continuous trading hours, and instead trade exclusively during the opening and closing auctions using market-on-open (MOO), limit-on-open (LOO), market-on-close (MOC), and limit-on-close (LOC) orders. Is there anything wrong with the reasoning I have provided above? What are the disadvantages I should be aware of? Is it a good idea to buy or sell stocks during the opening and closing auctions only?

External answer — Personal Finance Stack Exchange Author: Bob Baerker Original post: https://money.stackexchange.com/a/140203 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Most days, the opening 1/2 hour to hour tends to be more active because of the volume of news stories overnight. Volatility is a trader's best friend. But that doesn't mean that it's the best time of the day to trade and the remaining hours should be ignored. You should buy and sell when your price is available not based on some predetermined list of perceived advantages.

External answer — Personal Finance Stack Exchange Author: Fattie Original post: https://money.stackexchange.com/a/140271 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. You have in fact hit on a technique believed in by some traders. It's a fact that many day traders and also swing traders, do exactly what you say. For various reasons (some what you say, some otherwise) there's a coterie of traders who only trade the open, close, or both of those. You can visit any "trading chat" site and immediately find a billion words of argument on precisely this issue. Any number of You Too Can Make Millions By Day Trading Or Getting On The App Store books take this position. You've stumbled on to a "hot issue". Regarding your question, Is there anything wrong with the reasoning I have provided above? Yes, your reasoning is wrong because... All trading ideas are just ideas Given trading idea "X", take some Actual Money and trade with it for awhile You will soon (unfortunately, often very soon) agree that Ideas, Theories and Arguments about trading are worth: 0. There's a sea of ideas and theories, all of which are rendered utterly useless in the face of one action. It's a case of "go for it and report back", you know?

External answer — Personal Finance Stack Exchange Author: 0xFEE1DEAD Original post: https://money.stackexchange.com/a/140275 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Liquidity is great, if you need it. One of the main drawbacks is that there can be increased volatility and wider bid-ask spreads at the open, as the cash market reacts to overnight events and futures trading. At the close, trading is dominated by institutional investors. If you want to use a rule to avoid regrets from placing your order at the "wrong" time, you could wait until 15/30 min after the open/before the close, when the market is more stable and avoid the trading frenzy. A seismic shift towards exchange traded funds and other index-tracking investment vehicles has heightened the importance of the last half-hour of the US trading day, from 3.30 to 4pm, when these passive funds typically conduct most of their activity to accurately match their benchmarks. That has prompted traditional active managers to conduct more of their trading during this window to benefit from greater market “liquidity”. [...] Indeed, what traders refer to as the “liquidity smile” formed by the pattern of trading volumes has recently become more pronounced and turned it into a “liquidity smirk” due to the lopsided importance of the 3.30-4pm trading window. Some now fret that, with so much money sloshing around in a small window, it increases the risks of market mishaps. source: https://www.ft.com/content/9e1f05b4-43e7-11e8-803a-295c97e6fd0b