How Does Muhurat Trading Work?

Muhurat trading is an auspicious moment for both traders and stockbroker. For the traders in India, Diwali signifies the beginning of the new accounting year. On this day, they will offer a special Laxmi Puja, before muhurat trading.

For the uninitiated, muhurat trading is a special evening trading window, usually last for an hour on the day of Diwali. BSE, which is the oldest bourse in Asia, is conducting muhurat trading since 1957. Hindus believe that investing on this day ensures wealth and prosperity to life, and hence, they engage heavily on trading during the muhurat session.  Most of them buy stocks with long-term investment in mind. A popular belief is that the securities purchased on this day are for keeping.  Both traders and brokers welcome the new year on a positive note.

Since it is a special occasion, you need to prepare in advance so you can make the most of it. Let’s find out how to take advantage of muhurat trading.

It Is Important To Know The Timing  

Exchanges announce the date and time of muhurat trading in advance. Brokers perform a Laxmi Pooja before the beginning of the customary trading session.

This year’s muhurat trading will happen on November 14. The special trading window will remain open from 6:15 pm to 7:15 pm. It is considered auspicious to trade during that hour.

On most occasions, the trend on the day remains bullish, and it is easy to get carried away with festive enthusiasm. But we suggest that you base your trading decision on sound research and analysis. Here are some steps you can follow before the trading session begins.

Shortlist stocks you want to purchase: Before you trade in the special trading session, pick up a few stocks to add to your portfolio. Muhurat trading lasts only for an hour, means you will have to act fast. By preparing ahead, you will have a clear goal in sight.

Do your research: Before you decide to buy a stock, check its performance with analytical indicators. With your homework done, you can choose the best time to trade.

Let’s now discuss: how does muhurat trading work?

Muhurat trading is a special occasion for retail and institutional traders. Most of them make token trading to usher a positive beginning for the new year. As the new financial year approaching, it is the right time to look at your financial goals to fine-tune with your long term financial needs.

If you are a new investor, it is a good time to start investing. During the special one hour window, the market usually remains stable. So, you would feel more confident to trade.

However, if you are already investing, it is a good time to introspect and check the asset allocation in your portfolio is working to your liking. You can take time out to reconsider your trading strategy. If you think it needs to change, what is a better time to implement a new style than the muhurat session?

Word of caution

With only one hour available for trading, muhurat trading limits liquidity. We suggest that you select stocks that will generate long term profit. Muhurat trading usually isn’t the ideal time for intraday trading.

New investors can start investing by making a token investment on that auspicious day. However, try not to get swayed by the festive sentiment. Base your decision on the solid ground of research and analysis. Start with a small investment, advisably in a large-cap stock with an established track record. If you still don’t feel confident, we suggest you take help from an experienced financial advisor.

Conclusion

Keep the tips handly and trade confidently during muhurat session. To start a journey of financial freedom, there is no better time than starting it on the auspicious day of Diwali, with the blessings from Goddess Laxmi.