What is Muhurat Trading? Complete Guide for Beginners

Murat is a Hindi word that means it is an auspicious time to start, or you can say a perfect time to do something special.  

Trading is a concept that involves buying and selling goods and services between two or more parties with compensation paid by the buyers to sellers. 

Now Muhurat Trading is a very special trading activity held on one of India’s biggest festivals, Diwali, and it is only followed in the Indian Stock market.  

How did Muhurat Trading Started?

Usually, in much belief of tradition, stockbrokers start their year on Diwali. In that belief, many stockbroker families, traders, and merchant communities, mainly belonging to Gujarat and from northern Maharashtra, perform Chopda Puja to worship and honor their account books. This idea carried on and on to the trading avenue in faith that investing money in strong companies will hold their benefit for a long time.  

Reason Behind Muhurat Trading 

This Muhurat is for one hour in the evening, and people follow this after the Laxmi puja on Diwali. People believe that trading will open the doors for Goddess Lakshmi in their house during this time. Most people who trade in the stock market from India prefer trading at this hour to get better returns by investing in stocks. Usually, every year Muhurat Trading time is in the evening between 6: 15 pm to 7: 15 pm.

Remember that the market is highly volatile during this time period. So if you are a beginner, you should stay away from the market during this time. You can join a good stock market course from a good institute like The Thought Tree and then trade during Muhurat Trading.  

On The Day Of Muhurat Trading! 

On the day of Diwali, National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) permit a limited trading time. This session is divided into parts like Block Deal Session, Pre-Open Session, Normal Market Session, Closing Session, and Call Auction Session. Let’s see what these are :

Block Deal Session: Block Deal Session is the session in which parties agree to buy/sell a security at an already fixed price and inform the stock exchange.

Pre-Open Session: Pre-Open Session is the session in which the stock exchange determines the equilibrium price. And when the demand matches the supply of goods is called equilibrium price.

Normal Market Session: Normal Market Session is the session we already told you about that is that one hour where trading takes place on the day of Diwali.

Closing Session: The closing Session is the session where traders or investors at the closing market price can place a market order.

Call Auction Session: Call Auction Session is when the securities called illiquid securities are traded. Illiquid securities are the state of securities that cannot be exchanged with cash without a substantial loss in the value.

Who Are People Who Can Benefit From Muhurat Trading?

Since Volumes are high on the day of the Muhurat Trading Session, it is a perfect time to buy or sell stocks for both beginners and experts. This is the best time to start investing in stocks for the people who believe in alignments of auspicious planetary. 

Always observe the market during the Muhurat trading session time and start investing. Always look for high or good quality companies and purchase stocks with a long-term horizon. Usually, the stock market is volatile, and at this time of Muhurat trading, it’s highly volatile. 

Most people buy and sell just to express their gestures towards this auspicious day. So if you are interested in doing trading in that one hour of the Muhurat trading session, then don’t keep your focus on profits as much as you might keep on gesturing towards the beauty of that day.

Important Things That You Should Keep In Your Mind Before You Get Into Muhurat Trading!

  • People on Muhurat Trading Session come by considering that this is a one-hour auspicious time to make a good investment.
  • To make better decisions for trading, you should keep in mind that you always have to do a good observation and keep an eye on support levels and resistance. It has always been observed during Muhurat trading sessions that markets are always very volatile without any specific directions. So keeping support levels and resistance, you can make good decisions for trading.
  • The trading window is only just for one hour, so if you plan to get profits from volatility, you should be able to choose good trading volume stocks to get profits.
  • Invest smartly in Muhurat trading because it is always not guaranteed to get good returns by investing on this time of Muhurat trading day. Even if the performance of stocks is doing well on Diwali day, it will always depend on the fundamentals and some macroeconomic factors of stock performance in the future.
  • Always stick to the company’s fundamentals if you think of investing in some particular company because rumors usually spread fast, especially on this because of ongoing excitement, which is filled on that one hour of Muhurat trading.

I hope you got a good knowledge of Muhurat trading. If you are a beginner in the stock market, I will advise that you trade carefully during the Muhurat Trading because the market is very volatile during Muhurat Trading. 

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