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I have been day trading for a month, and I've noticed that the first twenty and final thirty minutes of the trading day seem to have repeating patterns. At the beginning of the day prices will often move to one extreme on high volume, then bounce back starting around 9:50. The 3:30 ramp is another well known phenomenon, affecting the S&P as well as other stocks on occasion.

Are these the times that large institutions do their trading? What forces drive these patterns?

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It is about commitment. Holding a investment overnight, or even more so, over the weekend is a large commitment. Many traders are unwilling to do so prompting a flurry of activity toward the end of trading days. I would expect more activity on Fridays, more yet on holiday weekends.

The opposite is true at the beginning of the day. Uncommitted money can be used to take advantage opportunities, and if the trader guesses incorrectly they can quickly undo their positions. This provides them with a degree of safety. That and money has to be put to work.

As always, one can counter this tendency of short term traders to take or close positions that are of good value offered by the tendency to not want to make a market close commitment.

  • Would you say a part of this observation is due to the behaviour of the market makers? – SMeznaric Feb 28 '17 at 14:45

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