Most stock prices rise significantly after 3:25 or fall just before 3:25, forcing us to enter at a lower price. Second, we simply want to be as close to the closing price as possible because many intraday positions are squared off at 3:20 p.m. and the price remains somewhat volatile for the next 5 minutes. In my opinion, the most accurate price is at 3:25 pm, which is reflected in the stocks as well, as most of them close at or near the price at 3:25 pm.
Until trading resumes on the following trading day, the closing price is considered the most accurate valuation of a stock or other security. There is a widely held belief that amateurs always open the market and professionals always close it. Opening prices can be influenced by a variety of factors, including global news, gap ups and downs, economic news, and so on. Furthermore, there is always a larger player than you working in the markets alongside you. By "bigger players," I mean people with a lot of money, also known as institutional investors or "smart money." They trade between 9:15 a.m. and 3:30 p.m., the same time as you. They face the same risk when dealing with billions of shares as you do when dealing with a single share. At night, anything can happen. He is basing his holdings on the day's closing price. As a result, it is the most important price. They are certain that it will not result in a gap the following day.
The primary goal of looking at the closing price is to ignore intraday price movement because it allows us to avoid tracking the market for the entire day, make fewer but higher quality decisions, enforce discipline, and reduce the likelihood of false breakouts. There are numerous examples of the market trading in the positive all day but then dipping into the negative at the end. When such movements occur, it indicates that professional money is at work at the time. In most cases, they are probably better at predicting future events than most people, so they are relying on the closing price of their holdings.
When looking at breakouts, we do not consider it very significant if the stock crosses above a certain level and then returns to the previous level. There are numerous intraday breakouts occurring in the markets, and tracking them is, in my opinion, a futile exercise because it is difficult to predict whether they will hold or not.
As only a few people can spot a breakout in live markets, the closing price is the earliest option to enter a trade. 90% of traders will begin researching the stock after the market closes, putting you ahead of the competition and allowing you to capitalise on gap-up opportunities. It aids in determining whether or not the trend is sustainable.
As a result, as you'll see, most of the charts are plotted solely on the closing price, implying that people's attention is drawn once the price closes above a certain level.
according to your idea.... if next day market will open with a big gap down then trader will get a big loss. some times market opens with a gap up but not most of the time. so, its risky .
drprakashbc
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Closing price of a stock is calculated differently. Buying a stock anytime after 3.0 PM should not make much difference to your buying price and the stock closing price. Admin can clarify on this.
rgagarwal85
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q0
paragpshah90
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Very clear explanation ...will help to make mind empty about entry timing
yoogeshmaheshwari
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@paragpshah90, Bro, If market gap down - Then you will be - Bada Pachtaoge Bada Pachtagoe. So go with momentum of stock after carefully watching short and long time frame and limit your capital, it doesn`t matter what`s perfect time, you should write your entry and exit & SL point in paper before trade.
natsbabu
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This is especially true for buying options ,where buying nearby closing time is found to be fetching best price though decision to buy was made at 3:00 pm
JagdishKumarPahuja
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Well explained .My question is different & I am sure can answer . It is said buy low, sell high . It sound well . Some people say buy above Or buy break out which means buy at higher price . Now even than price can fall. Sometime stop loss is cut .Thus what is logic for buying at break out or buy above . Is it not better to buy at low & wait for a momentum / break out/ than to place a stop loss or book profit .What does market , no one knows but buying at low you make a profit . Some one said that buy when a stock is sleeping , means when it is trading at sideways/ range, or in consolidation mode . It is more beneficial for swing investment. Pl share your thoughts .
yoogeshmaheshwari
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@JagdishKumarPahuja, Bro, we should buy stock when stock is catching its momentum. Otherwise, no one knows when consolidation will be over(Exception is Flag Pattern, if flag pattern has made then we can buy and wait for 10 days approx for next swing for exit) and you will be frustrate with capital infused or FOMO effect.