The final hour of trading, between 3 and 4 PM EST, is known as the “power hour” in the stock market.
Introduction To Power Hour
It is common knowledge that the New York Stock Exchange (NYSE) and Nasdaq Stock Market have regular trading hours on weekdays from 9:30 am to 4 pm ET (except when the stock market is closed for a holiday).
The regular trading session ends at 1 p.m. ET on days with an early closing, which is typically immediately before, shortly after, or close to a stock market holiday.
However, trading can also be done beyond regular business hours on the stock exchange.
For instance, during the pre-market trading session on days with a regular session, one can purchase or sell stocks. Typically, the pre-market session lasts from 4:30 a.m. ET until 9:30 a.m. ET.
The after-hours trading session, which begins at 4 p.m. ET and finishes at 8 p.m. ET, also allows traders to purchase and sell equities.
Prior to the internet, only institutional investors and high-net-worth traders could purchase or sell during pre-market and after-hours trading sessions. However, thanks to technology improvements, tiny traders can now take part in these sessions.
Trading in extended sessions often involves placing an order through an electronic communication network on the exchange, just like one would during a regular session (ECN).
Trades for equities can only be made using limited orders in the pre-market and after-hours sessions. Based on such established constraints, an ECN automatically matches the orders and only executes matches.
Even while stocks can be traded before the market opens, during regular trading hours, and after hours, seasoned traders are aware that some times of the day are typically more active than others. These are referred to as power hours.
We’ll talk about power hours, how to analyze power stocks, and how to profit from this trading period in this blog.
What is the power hour on the stock market?
A short window of time in the stock market when significant, frequent deals are made is referred to as “power hour” by traders and investors. The value of indexes and equities both during and after the power hour period may be greatly impacted by these deals.
Typically, the power hour period takes place between 9:30 a.m. to 10:30 a.m. ET and from 3 p.m. to 4 p.m. ET. The usual trading session’s start and end times are during those times. In general, Friday and Monday are regarded as the two days of the week with the most unpredictable power hours. This is as a result of the stock’s closed Saturday and Sunday hours.
Due to the fact that many traders frequently exit positions (such as expiring options contracts) on Fridays before the market closes, Friday typically features the most volatile power hour. There is a massive volume created as a result of the mad rush. Therefore, the considerable volatility caused by the enormous volume presents a potential for good profits.
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