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Best time to trade on the NSE in Kenya

Analyst Team trader
Updated 28 May 2024

Those who have been investing for a considerable amount of time are accustomed to the peculiarities of the stock market and are not afraid of the difficulties that come with navigating the volatile seas of the stock market. Instead, they focus on conducting in-depth research on the many market movements that have an impact on stock trading.

Having said that, successfully trading stocks requires knowing a few trade secrets, one of which is knowing when the optimum times are to trade.

In this article, we will discuss the optimal time to trade on the Kenyan Stock Exchange (NSE) as well as provide you with more useful advice that will help you launch a successful stock trading career in Kenya.

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Best time to trade on the NSE

Best time of day to trade

Early in the morning, market volumes and prices are likely to be particularly turbulent. The market considers all events and announcements since the previous closing bell, which contributes to the price volatility that occurs during opening hours.

A trader with greater expertise may be able to recognize the appropriate patterns and make a quick profit as a result, but a trader with less experience may incur substantial losses as a result of their inability to do so.

Therefore, inexperienced traders should likely avoid turbulent hours, or at least the first hour of trading.

Having said that, the first fifteen minutes after the opening bell are perfect for experienced day traders. This is due to the fact that beginning trends usually provide the greatest transactions of the day around this time.

The optimal moment for such traders to trade is at 09:30, East Africa Time. This period is usually regarded as one of the best hours of the day for day trading, as it delivers the most substantial price fluctuations in the smallest amount of time.

Given that market volatility and volume tend to diminish about 11:30, a considerable proportion of professional day traders cease trading at that time. This causes trading to take longer, price swings to be less, and volume to be lower than usual.

The majority of the day's trading activity is typically calm and consistent during the middle of the day. People are holding their breath as they anticipate the release of fresh news throughout this period.

Since the majority of the day's news announcements have already been factored into stock prices, many investors are currently focusing on the direction of the market for the remainder of the trading session.

This is an ideal time for a beginner to begin trading because prices are normally stable during this period. In addition, there is less activity at this time, thus results may be more predictable.

Volatility and volume both increase in intensity during the latter trading hours of the day. In reality, typical patterns that occur throughout the trading day on the stock market indicate that the closing hour of trading can resemble the opening hour.

This can involve abrupt market reversals and substantial price changes, especially in the last minutes of trading.

trading hours nse

Best day in the week to trade stocks

Some people believe that certain days’ yield returns that are essentially superior to those produced on other days, although there is little evidence to support this view for the market as a whole over the long term.

The assumption that Monday is the most productive day of the week continues to be widespread. This phenomenon is also known as the weekend effect or the Monday impact. Mondays have historically been characterized by a negative trend on the stock market, according to anecdotal evidence from traders.

Some persons believe this to be the truth because a significant amount of negative news is often published over the weekend.

Others refer to the investors' dismal perspective as a result of having to return to work, which is particularly evident in the early hours of trading on Monday.

If you are interested in purchasing stocks, however, it is advised that you do so on Monday rather than any other day of the week. You will have a larger probability of finding deals in the process if you do so.

Best time of the week to sell shares

If Monday markets are more likely to be in a downward trend (for which there is little empirical evidence, but many traders and investors appear to believe), then Friday markets are more likely to be in an upward trend.

Many market players believe that the prices of stocks and indexes rise on Fridays. This could be due to the confidence that accompanies the weekend, or because the market has not yet weighed in the news from the weekend.

Monday may thus not be the greatest day to sell equities. If you wait until Friday, you may be able to negotiate a little better deal.

However, it is essential to remember that regardless of whether it is the weekend, you should analyse each week on its own merits and potential negatives.

Fridays may be a favourable day to sell stocks, but traders and investors who disregard the market's larger backdrop and fundamental research do so at their own peril. In principle, Fridays may be a favourable day to sell stocks.

The more the liquidity and volatility of a market, the greater the potential for profit by participation in that market. Unfortunately, this also means risks of loss are higher too.

If a significant macroeconomic event such as an election occurs on a Tuesday, for instance, there is a strong chance that Tuesday will be the best trading day of the week.

when to trade kenya stock exchange

Best day of the month to trade shares

The “best” or “worst” day of the month for trading or investing in stocks has less clear statistics than the “best” or “worst” time of day; rather, this will mostly depend on the month in question.

Some traders speculate that when salaries are paid at the end of one month and the beginning of the next month, when some traders and investors have a bit more discretionary income to spend on new trades and shares, there may be an increase in stock purchases.

If so, the optimal timing to sell shares may be at the beginning or end of each month. During certain periods, there is likely to be an increase in purchasing interest, which may lead to a spike in share prices.

Consequently, the middle of the month may be a good time to purchase stocks, as prices may be lower at that time.

Bonus tip

It is crucial to take positions in the market when it begins to collapse, as prices for both good and bad stocks will fall in a bear market.

During a bad market, many strategic investors try to purchase solid companies that would offer them with excellent returns and dividends.

If one acquired a stock at a high price, it may be time to cut one's losses and invest in alternative stocks. Even if the bear market shows little signs of abating, the Kenya Stock Exchange (NSE) has maintained its strength.

best trading time kenya stock exchange

Final Thoughts

When considering the optimal time to trade, it is vital to keep in mind that the success of the past does not serve as a reliable indicator of the results of the future. If you want to determine when the best moment is for you to trade, you need to take each day, week, month, and even hour into consideration on its own.

According to the common wisdom among investors, the most profitable time of the day to buy and sell shares is in the morning, right after the opening of the markets and for the subsequent couple of hours after that. This is because the markets are at their most liquid at these times.

Because more individuals are trading at that time, most people agree that Monday is the best day of the week to invest in stocks. This is due to the fact that there are more people trading on Mondays. The expression “the Monday effect” has been coined to describe this phenomenon.

The belief that Friday is one of the best days of the week to sell shares is common, and it is one of the days of the week that falls on the weekend. This is due to the fact that trading and investor volumes are lower on Fridays, although the prices of shares and indexes may be higher.

It is also unknown when day of the month is considered to be the best day to purchase shares, nonetheless, it is probable that this day will fall somewhere in the vicinity of the last or first of the month. This is owing to the fact that the “pay day impact” might bring benefits to shareholders who sell their shares during this time period.

The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.