To The Moon

Is There A Best Time To Trade?

The opening 9:30 a.m. to 10:30 a.m. Eastern time (ET) period is often one of the best hours of the day for day trading, offering the biggest moves in the shortest amount of time. A lot of professional day traders stop trading around 11:30 a.m. because that is when volatility and volume tend to taper off. Once that happens, trades take longer and moves are smaller with less volume.

The middle of the day tends to be the calmest and most stable period of the trading day. During this time, people are waiting for further news to be announced. Because most of the day’s news releases have already been factored into stock prices, many are watching to see where the market may be heading for the remainder of the day.

In the last hours of the trading day, volatility and volume increase again. In fact, common intraday stock market patterns show the last hour can be like the first—sharp reversals and big moves, especially in the last several minutes of trading. From 3 p.m. to 4 p.m. ET, day traders are often trying to close out their positions, or they may be attempting to join a late-day rally in the hope that the momentum will carry forward into the next trading day.

Higher volume = volatility & opportunity 🤑

What Are The Power Hour For Trading?

Power hour in the stock market is a phenomenon that has been noticed by traders and investors all over the world. It should be noted that this isn’t 100% rule that is present all the time, it’s not as if during power hour the market goes up and this is the secret holy grail that traders can take advantage of. Rather power hour is the movement in the market that is MOST volume heavy and trading activity is the highest during this time.

In short power hour can be described as a time in the day where there is the most market activity found, with both volume and price movement. This can also be described as the point in the day where the larger money (institutions) gets the most active, and as we may or may not know that happens twice throughout the day.

News, views & big deals?

What Factors Affect The Power Hour?

There are a few news events that traders have to look at when trading stocks during power hour, these can affect either or ends of the power hour band, morning or afternoon session. These events can signal an even more volatile and opportunistic power hour should they be understood before the event such as:

- Earnings report

- FOMC news

- Fed speakers

- Economic data releases

- Options expiry & Quad or Triple-witching

Monday’s Blue Is Also True?

To understand the power hour definition, you must keep in mind that the higher the activity of traders, the higher the volatility. And this is your chance to make a profit.

Traders say the stock market has had a tendency to drop on Mondays. Some people think this is because a significant amount of bad news is often released over the weekend.

Others point to investors’ gloomy mood at having to go back to work, which is especially evident during the early hours of Monday trading.

Low volume Monday

The chart above shows that while Mondays on average have marked negative returns for the S&P 500 in 2018, the volume is also the weakest as compared to the rest of the days as market watches for a direction for the week ahead.

Typical Time Frames in Trading Strategy

Hourly time frames are used by short-term traders, who hold trades from several hours to a week. In the following table, we highlight some of the most popular time frames in which day traders hold their positions.

While shorter time frames are most popular, some traders feel most comfortable with longer-term charts like the 1-hour charts. The longer time frame allows for more time to analyze the market without feeling rushed.

Trading Strategies For Power Hour

Strategies used during power hour can be divided into five different strategies:

- Scalping

- Day Trading

- Swing Trading

- Positional Trading

- Long Term Investing 

Is Longer Necessary Better?

15-minute and 5-minute day trading charts are the most popular when it comes to trading time frames. If you’ve narrowed down your strategy to these two time frames, which one is better? Which one has the best potential to offer the most success?

When deciding on the best time frame, it’s important to consider how much time you want to commit to trading every day. A lower time frame means longer screentime. A longer screen time and higher trading frequency increase the chances of making mistakes. Because of this, it’s crucial to choose the charting time frame based on the time and frequency of your trades.

A 15-minute chart is used to determine the trend and key points, and a 5-minute chart is used to set a stop loss and track a position. Also, a 5-minute chart tracks price movement in 5-minute increments, giving you more visibility into price movements as they happen in real-time. So, while you’ll be able to see more of what’s going on in the market with 5-minute charts, you’ll likely spend more time trading.

On the other hand, 15-minute charts are more long-term and give you the ability to trade from a mobile device with less time commitment.

Power hour provides volatility and opportunity to profit. Always take time to rest and recharge instead of staring at the screen all day long. The best time frame to trade will depend on what best suits your trading strategy, availability and personality.

Staying in front of the computer will result in over trading as the fingers will grow itchy to take on more trades resulting in over trading or revenge trading. Remember, trading is not gambling. Moreover, players never win by lingering in a casino!

Hence, a successful trader needs to be very disciplined, always consistent and learn to persevere during tough days. Trading is the most difficult job around as it deals with your emotions which is the toughest to manage.

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