How Does Power Hour Work

How Does Power Hour Trading Work?

How does power hour work when trading? Between 3 and 4 pm EST is known as power hour, and it’s the last 60 minutes of the day to trade the regular hours of the stock market. It’s the second-best time of the day to trade. This is when traders look to take profits, day trade the volatility in the last hour, or close their trades out for the day. It’s also the time traders enter into new swing trade positions.

How does power hour work? You have a wide time frame for the last hour of the day trading. Commonly known as power hour, the time can fluctuate depending on the day. Power hour trading will not always consist of large spikes or huge volatility.

Tuesdays and Thursdays tend to be the flattest days out of the week for power hour, with Fridays and Mondays being some of the most active as people either want to get into or get out of positions before the market closes.

Hence, there is a need to know how power hour works. Typically, the power hour is within 2 hours of the market close.

It’s important to know the best times to trade the stock market. As a result, you’ll have a greater ability to profit.

This will consist of both Power Hour and Pre-Power Hour. 

Common Thoughts on Power Hour

As with everything in the market, you will have common thoughts that drive certain actions. Many of these things may seem like a self-fulfilling prophecy.

However, they happen, and you need to take advantage of them. So here are a few of the most common thoughts surrounding power hour trading. 1. End-of-day trading can only be from 3 to 4.

This is a big misnomer as PH can be as early as 2 pm and on till close. If you’re only a morning trader, your end of the day is 11 or 12. If you’re an all-day trader, the end of the day could be 3:30 and on, so it is a broad term and a big misconception.

2. Patterns aren’t as effective at the end of the day.

Patterns are patterns. You trade them the same way, no matter the time of day. When a pattern is developing, it should be traded with the plan you’ve constructed for that pattern.

3. Only master traders should trade the end-of-day session

Skill is needed to make any trade in the market. You don’t need to be a master trader, but you do need a game plan. Figuring out how you’ll play the chart depends more on your stock trading style than the time of day.

While you typically see higher volume at the end of the full trading session, it should be traded with a predetermined plan.

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What to Look

Trading the PH session is just like any other part of the session. Looking for the same things you would look for in any trade.

Let’s get a bit more in-depth, though. We will break this up into three sections: scalping, day trade, and swing trading.

Let’s go ahead and get the hard one out of the way, day trade. A day trade is typically longer than 20 minutes.

With this logic, you must have planned and entered your trade before 30 minutes of the close. Entering a trade after this time mark would fall more into performing a scalp than a day trade. When 2 pm comes around, and you’re looking to make a trade, what do you need to look for? Simply the same thing you look for in the morning session.

One of the more interesting parts of the PH session is the data. With the end of session trading, you have that day’s previous trading data at your fingertips, much like a live pre-market.

Look for a substantial pattern allowing a solid trade before the sessions end. Identify the volume to drive the trade in the direction you are looking for.

Volume can seem a little light, but you should be able to see the overall trend this far into the day. Technical analysis will be substantially important to trading this time frame.

It is not master level, but you want a good grasp of the chart. Check out our penny stocks list for potential stocks to day trade during power hour.

Power Hour Example

Power Hour Example
Behold! Note how $AMD broke out of an ascending wedge during power hour. Heavy volume and bullish price action happened nearly right at 3 pm! Chart provided by TrendSpider.

Swing Trading Power Hour

The swing trade. A swing trade consists of something you plan to hold past the end of the trading session.

I want to liquidate the next day or further down in the timeline. This end-of-day time frame can help place a swing trade.

Placing a trade toward the end of the day allows you to look at the day’s overall trading activity and evaluate if it is worth committing.

It’s always best to look at the 30-minute, one-hour, and day time frames for swing trading. Given your plan to swing this trade, getting the best price is essential.

Reviewing the ticker’s current-day movements will allow you to place an order at a much more desirable spot. Waiting until the last ten minutes of the day can lead to an unfilled order.

Everyone is cramming their orders in to get that last price before the bell, which can leave your order being skipped and unfilled. You must remember all these things if you place a swing trade at the end of the day session.

Check out our online trading courses to learn how to swing trade and day trade.

Scalping Power Hour

Scalping is the hotkey ninjas’ favorite trade. As the name states, you are looking to perform a scalp trade. A quick trade-in and out holding for no longer than a few minutes at most.

Scalping the PH session is very similar to the morning bell. All of the same principles will be used, and assessments will be the same. Look for that quick volume spike towards the last 15 minutes of the day and catch the move.

Thanks to all the info from that day’s session, a bull flag or descending wedge breakout will be two of the easiest patterns to see. The only major concern is order fulfillment, as many others try to get into hold overnight.

Being with a good broker will help with this negative, though. A fast and accurate order fill will be the key factor for scalping the PH session.

To learn more, check out our stock training to learn about many of the different patterns in the market. Overall, make sure to use good risk management.

Final Thoughts

How does power hour work? Looking at your trading skills and assets will determine if the end-of-day session is for you.

Experience does help, and as always, I recommend paper trading before any live action is taken. Trading with a plan and protecting your capital will be the top skills needed to grow your wealth, which was developed with paper trading.

Check out our live trading room to learn more about trading styles and patterns. You’ll see us in action in the morning and during power hour.

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