Tuesday, August 3, 2010

Don't Buy on Market Open?

Someone has said that don't buy at the market open, as you most probably will pay a higher price.  The reason is at market open, usually it is novice or retail investors who are coming in to buy based on yesterday's price. 

There are only three possibilities if you buy at the market open.  One, the closing price is higher than the market open price.  Two, the closing price is lower than the market open price.  Three, the closing price is the same as the market open price. 

I gave the theory a simple test, but only to find out that, if you know what you aiming for, then it doesn't really matter whether you buy at the market open or market close.  If you are aiming for dollars of profit per share, then you won't might a dime or two difference in price. 

In some cases, especially in a super up market, buying at the market open sometimes can give you some slight price advantage even. 

So, the conclusion is it doesn't matter whether you buy at the market open or close, as long as you know what you are doing and what you're aiming for.

Happy investing!

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