So I’m always curious as to why we get rapid movements occurring in the NASDAQ100 at certain times. All times listed here are Eastern Standard Time. Pay attention to these times cos’ they will help you in taking better trades.
The S.M.O (stock market opening) opens at 9:30 am which is after the Newyork session begins. There is usually a surge in one direction that might possibly take you out of any trades you in. It is usually calm until 9:45 am. At 9:45 a.m The initial surge often sees a significant reversal or pullback. This is often just a short-term shift, and then the original trending direction re-asserts itself usually resulting to longer candle wicks. NOTE: “Always watch out for that pinbar”
At 10:00 a.m EST If the trend that began at 9:30 a.m. is still in play, it will often be challenged around this time. This tends to be another time where there is a significant reversal or pullback. It’s advisable to wait for 10:00 am to take quality trades and avoid fake-outs. Any chart pattern that shows up around this period (usually the double tops and bottoms with wedges) is usually very valid.
At 11:15 am, the market is heading into the lunch hour, and the London session is getting ready to close. This is when the momentum in the market will typically die out for a couple of hours and are represented by smaller candlesticks, but often the daily high or low will be tested around this time. At 11:30 am European traders usually close out positions or accumulate a position before they finish for the day. They would be a little surge after 11:30 am due to these European investors.
At 11:45 a.m.–1:30 p.m: This is lunchtime in New York. Usually, this is the quietest time of the day. NASDAQ 100 is a bit stubborn so sometimes it can be very busy and often, day traders like to avoid it.
At 1:30–2:00 p.m If the lunch hour was calm, then expect a breakout of the range established during lunch hour and vice versa. Oftentimes, the market will try to move in the direction it was trading in before the lunch hour.
At 2:00–2:45 p.m, The close is getting near, and many traders are trading with the trend thinking it will continue into the close. That may happen, but expect some sharp reversals around this time, because on the flip side, many traders are quicker to take profits or move their trailing stops closer to the current price.
At 3:00 and 3:30 p.m big “shakeout” points, that they will force many traders out of their positions. If a reversal of the prior trend occurs around this time, then the price is likely to move very strongly in the opposite direction. Even if the prior trend does sustain itself through these periods, expect some quick and sizable counter-trend moves.
As a day trader, it is best to be nimble and not get tied to one position or one direction. It can be very hard to hold a trade for very long between 3 p.m. and the close. The last hour of trading is the second most volatile hour of the trading day. Many day traders only trade the first hour and last hour of the trading day.
3:58–4 p.m The market closes at 4 p.m. After that, liquidity dries up in nearly all stocks and ETFs, except for the very active ones.