Every good investor knows that in order to make money on any investment, you must first understand all aspects of it, so let’s look at why most trading volume is concentrated at the beginning and end of the day.
If you have ever come home from work and used your evening hours to research stocks and place trade orders for the next day, you and others like you are the reason for the first hour high volume. As soon as the stock market opens, a rush of programmed trades enters the market and is quickly filled.
Along with the trades executed for retail investors, much of the volume comes from mutual funds, hedge funds and other high volume traders. Another source is day traders who have to set their positions for the day during the first hour. All of these factors added together represent a large amount of volume in a short amount of time.
But what about the afternoon?
A common rule among day traders is to always end their day without any stock positions, so they must sell their...
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