Trading Tip #13: THE LAST HOUR OF TRADING

Depending on your skill level and experience, the last hour of trading (from 3 - 4 PM EST) could either the best or the worst hour of trading for you; and by worst, I mean your account value being wiped out, repeatedly. Especially if you’re trading Options.

The last hour of trading has traditionally been the most volatile hour of trading, because of the following reasons:

  • Trading on the CME floor stops at 3 PM EST. Once the CME closes, you will see a huge surge in Stocks/Options volume, as the smart (and cheap) money starts flooding the Equity Markets.
  • The last hour of trading is also when the Big Institutional Players Load/Unload there massive positions. You’ll see blocks of 100,000 hitting the tape in some cases (esp. Dark Pools), causing the stock to move erratically in either direction.
  • The recent trend (post-QE) has been: Pump The Open, Trade Flat For Rest of The Day, Occasional VWAP Dumps, and 3:30 PM Algo Ramps.

Opening new positions is not recommended in the last hour of trading.

Dump/Close all your positions (if you Day Trade), before 3:45 PM.

Pat yourself on the back if you make money. Pat yourself on the back if you lose money.

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