How Many Traders Are Present at the Market on a Typical Day?

It is estimated that only 4.5 percent of intraday traders are successful in generating significant profits, while the success rate rises to 6 percent if success is defined as not losing money. Other sources even place the success rate at 1 percent, particularly for men. When trading intraday on the US stock market, certain patterns may be observed depending on the time of day. These trends occur frequently enough for professional day traders to base their trades on them.

For instance, the stock market may become less volatile and record less volume at lunchtime in and around New York. As a result, many day traders stop trading half an hour to an hour before the slowdown begins and don't return to trading until after lunchtime when volatility and volume rebound. Intraday traders should be agile and not tied to a position or direction. The last trading hour is usually the second most volatile hour of the day, so it is best to avoid holding a trade for a long time between 3 p.m.

and 4 p.m. Some day traders only trade during the first and last hours of the trading day. Big news can cause big trends, setbacks or movements during lunchtime or other times that would be uncommon without some kind of external catalyst. If you think a stock will rise throughout the day, then the best time to buy it would be the first pullback of the day.

Traders can look for bullish signals before trading, depending on their strategy. For example, if they rely on buying oversold rebounds, they'll be on the lookout for strong pre-market sales. Impulse traders would do the opposite and look for stocks that are ready to open an upward gap at the opening. Seasonal patterns can refer to patterns in specific stocks or general patterns across the market.

Some companies have seasonal cycles, such as a cruise company that sells more tickets during the holidays, and their inventory may reflect that. Other traders are aware of general seasonal patterns, such as selling in May and leaving until November. This contrasts with another stock market strategy which consists of buying a smaller number of more expensive stocks and maintaining that position for a long time, relying on the general upward trajectory of investments in the market to generate profits with those shares. In addition, NYU's 93 years of stock market return data show that the average stock market rate of return has historically been 9.8 percent.