It’s probably been asked but I have a question around when to exit during the session. Is there an optimum time to sell (backed by research)? Often I experience quite a bit of slippage versus the signal price. WOR is a good example today where it gaps 5% below the signal price only to recover. It turned a 5% loss into a 10% loss. Interestingly it was a BAP trade I took as the STOP was fairly close to the price action when I bought so I have probably subconsciously ‘banked’ on only losing circa 5% in the event of it not working out Weird how the mind works sometimes.
Now this is a sample of one admittedly but has any research been done regarding a statistically better time to sell?
I know that sometimes the open will be better than the close but was just interested as to whether a certain time of day tends to be better than others.
There probably isn’t a definitive answer as it’s all pretty random but thought I would put it out there.
G’day Nick …
I used to try and ‘game the system’ but eventually just stuck to a set rule. There is never a time in the day when it will always be better to trade, so now I just sell at around 11 am. I avoid the first hour (for buy or sell) because there is sometimes a bit of ‘jostling’ until the price settles more. Partly caused by trades submitted for ‘open’ price or similar distort the day’s overall trend for the first little while each day. I also avoid the last hour for similar reasons. Of course, sometimes the distortion will be in your favour, but other times …! Even for those who cannot access their computer (or phone) at around 11, the trade notice could still be sent pre-open or whenever by using the “Active time” option (or whatever it’s called on your favorite broker’s site).
Like you, I had to sell WOR today (glad to get rid of it the way it’s been going!), but just did it around 11 rather than trying to decide if it was going to trend up or down later. I think the Investor trigger details just use the close price for consistency and so that it is a price that everyone can see and check historically, whereas a price taken at a ‘during the day’ time wouldn’t be easily verifiable for people checking back. Even so, it is still a price taken at a fixed time no matter what the daily trends. I’ve got better things to do than watching the price flucs and trying to pick when to hit the sell button! Hope that helps.
I too suffered the same fate today with WOR selling early in the session and I was wondering what I could have done differently.
I do like the 11.00 am idea , however im not always near my PC at that time of day.
I also was wondering if it would be an idea to load the previous days closing price as your sell price , however I guess that this is potentially frought with danger if the price drops too low and never recovers .
Id be very interested in hearing what methods others use .
Generally speaking ai try and sell at 10:30. On down days you’ll notice there’s often an initial drop followed by a bit of a bounce then a further drop. Won’t work every time of course but 10am seems like the worst time to sell usually.
For better or worse I just take the opening price as it is easy to execute. Whenever I have faffed around in the hope of a better price I have generally come off second best…
Although WOR went down, other trades have opened up.
If you aren’t always at your PC at 11, does your broker’s online site allow for ‘sell/buy at/after specified time’? CommSec does, as one of the options under the ‘Conditional Orders’ tab in the Trading page … other brokers may have a similar thing. Using it, you just move a cursor across a timeline to include the times when you want the trade to be available at the market price at that time. Using that facility, you can set you trade, even before the market open time. Stick to a set time (if I am not at my PC at that time I just take to order whenever I am next online and I certainly don’t try to ‘judge’ whether the current price is good or could be better … ‘it is what it is’ so I just hit Submit!
And as you say, using yesterday’s close for buy or sell may keep you out of either trade type.
For what it’s worth IMHO:
I think we should keep in mind that we are trading a system that has been back-tested and forward-tested and is both robust and successful.
If we stick to the rules we will be successful also. If we try to finesse the trades we introduce what amounts to human error.
For me, if there’s a sell signal I take it at the open of the next day and move on to the replacement trade.
All the best
Long term it makes no difference what time you sell. Consistency is the key. I sell at open. If the indicative opening price is reasonable, then putting at or near will usually get it sold at match off. There are various ways to tweak to get a better price and still be consistent. The greatest benefit of selling early is you don’t have to chase the price down (if it rises it will take you out anyway), and if you were fully invested, you have funds to snap up any buys or bap’s at around the same level of market sentiment.
I have it in my plan to close trades at the earliest opportunity which for me is around open and open trades about 12. I do this because I am at work and it suits.From my experience over numerous trades it makes little to no difference. I also put an alarm for trades on my phone as I have too many distractions at work and I may miss the trade for the day to my expense.
Great answers everyone - thanks!
Reminding everyone that if you want to measure your slippage, all research used the Close price on the day after the signal (buy & sell), i.e. the Action Price.
MND had a bit of slippage today. Sold my larger parcel at the open but somehow found the lowish part of the day for the second parcel. Price rallied almost immediately to the highs of the day and cost me a few hundred dollars. Some of these stocks have very wide trading ranges on the action days. Really mucks the returns around once you add up all the slippage.