How does power hour work when trading? Between 3 to 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 are looking 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 When Trading?
- How does power hour work? When it comes to the end of day trading you have a wide time frame. Commonly known as power hour, the time can fluctuate depending on the day. End of day 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 the end of day trading. With Friday and Monday being some of the most active as people are either wanting to get into or get out of positions before the market closes.
Hence the need to know how does power hour work. Typically end of day trading 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 both of Power Hour and Pre-Power Hour. Check out our stock trading service to learn more about trading power hour stocks and how does power our work.
As with everything in the market you’re going to have common thoughts that drive certain actions. Many of these things may seem like a self-fulfilling prophecy.
However, they do happen and they’re things you need to take advantage of. So here are a few of the most common thoughts surrounding the end of day trading. 1. End of day trading can only be from 3 to 4.
This is a big misnomer as the end of day trading can be as early as 2 pm and on till close. If you’re only a morning trader then really your end of the day is 11 or 12. If you’re an all-day trader then end of the day could be 3:30 and on so it is a very broad term and a very 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 really depends more on your stock trading style than the time of day.
While you do typically see higher volume at the end of the full trading session it should be traded with a predetermined plan.
What to Look for
Trading the end of day 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 need to 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 2pm comes around and you’re looking to make a trade, what do you need to look for? Simply same thing you look for in the morning session.
One of the more interesting part’s of the end of session trading 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 that will allow you a solid trade before 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.
Not master level but you want a good grasp on what the chart is saying. Check out our penny stocks list for potential stocks to day trade during power hour.
Swing Trades: How Does Power Hour Work
The swing trade. A swing trade consists of something you plan to hold past the end of the trading session.
Looking to liquidating the next day or further on down in the timeline. This end of day time frame can be helpful for placing a swing trade.
Placing a trade towards the end of the day allows you to look at the days overall trading activity and evaluate if it is work making the commitment.
For swing trading, it’s always best to look on the 30-minute, one hour, and day time frames. Given you plan to swing this trade getting the best price is essential.
Reviewing the tickers 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 order’s in to get that last price before the bell which can leave your order to being skipped and unfilled. All these are things you need to keep in mind if you’re going to place a swing trade at the end of day session.
Check out our online trading courses to learn how to swing trade as well as day trade.
Scalping: How Does Power Hour Work
Scalping, 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 end of day session is very similar to the morning bell. All of the same principles will be used and assessments the same. Look for that quick volume spike towards the last 15 minutes of the day and catch the move.
A bull flag or descending wedge break out will be two of the easiest patterns to see thanks to all of the info from that day’s session. The only major concern is order fulfillment as many other people are trying to get in as well to hold overnight.
Being with a good broker will help on this negative though. A fast and accurate order fill will be the biggest key factor for scalping the end of day session.
To learn more check out our stock training to learn many of the different patterns in the market. Overall just make sure to use good risk management.
Is It for Me?
How does power hour work? Looking at your skills and assets as a trader 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 is developed with paper trading.
To learn more about trading styles and patterns check out our live trading room. You’ll see us in action both in the morning and during power hour.