Generations have gone by and stock traders across the globe have worked their schedules and businesses around what are popularly known as ‘trading hours’. The hours between the opening and the closing bells. In India that happens to be between 9.15am and 3.30pm. Settlements happen at the end of the day.
During the day seasoned traders have figured out strategies based on statistics on the most and least profitable trading periods.
There’s the 10 am rule that refers to the idea that the traders should not make any big moves before 10 am in a trading day. This is because investors believe that the time between ‘Opening Bell’ and 10.00 am is meant for the market to stabilise.
Then there’s the “11 am rule” which refers to a guideline suggesting that it’s prudent for traders to wait until 11 am before making any significant trading calls. Traders aim to gain better clarity on market trends and reduce the risk of making impulsive or emotionally-driven trades. This approach can help traders make more informed decisions based on more stable market conditions later in the morning.
Here’s a breakdown of the rationale behind the rule:
· Market Activity: By 11 am EST, the market has already been in session for a few hours, with a significant portion of trading activity having occurred.
· Trend Confirmation: A new high or low established during this time frame, especially with good volume, might be seen as a confirmation of the existing trend.
· Institutional Investors: Some believe larger institutional investors may be placing larger orders around this time, influencing the direction of the stock price.
In the Indian stock markets–BSE and NSE–trading hours become important for short sellers as well, as settlements happen at the end of the closing bell.
Why am I going through this information?
There’s a concept doing the rounds–just now in the west–that will render trading hours redundant. It’s called the 24X National Exchange.
The 24X National Exchange, which counts Steve Cohen’s Point72 ventures fund as a backer, has secured permission to start offering sessions that span the US daytime and later add overnight trading. The plan would preserve one-hour breaks starting at 7 p.m.
Who’s Steve Cohen?
He’s an American hedge-fund manager and presently the owner of the New York Mets of Major League Baseball. Cohen bought the New York Mets in 2020 for a colossal $2.4 billion, the highest sale price ever for any Major League Baseball team. Why am I tell you this? Simply to emphasize that the man means business.
What’s Point72?
Point72 Asset Management, is a $35 billion (assets under management) hedge fund firm that was established in 2014 and started managing outside capital in the year 2018.
As with everything out of the ordinary, there has be an instant resistance.
The proposal to allow nonstop stock trading has split Wall Street. Opponents have been quick to warn that the quality of trading would suffer from lower volume, which can make pricing less precise. A lower volume is an obvious outcome when hours are relaxed and investors do not need to plane their play within restricted hours.
Supporters have pointed to the fact that stock traders are most at-risk when the market is closed in their geographic location, a problem that this concept will be seeking to alleviate.
How would 24X really function?
24X would offer three sessions that start at 4 a.m. in New York and extend to 7 p.m. Once it’s able to meet certain data requirements, it is likely to add an overnight session from 8 p.m. right up until 4 a.m., according to SEC’s order. The schedule would run from Sunday evening through Friday evening.
That traders and investors will take time to learns the ropes of playing in a round-the-clock market goes with out question. It remains to be seen the new opportunites this system would have the potential of offering to maverick hyper-innovative speculators.
There’s a concept doing the rounds–just now in the west–that will render trading hours redundant. It’s called the 24X National Exchange.
The 24X National Exchange, which counts Steve Cohen’s Point72 ventures fund as a backer, has secured permission to start offering sessions that span the US daytime and later add overnight trading. The plan would preserve one-hour breaks starting at 7 p.m. Opponents have been quick to warn that the quality of trading would suffer from lower volume, which can make pricing less precise. A lower volume is an obvious outcome when hours are relaxed and investors do not need to plane their play within restricted hours. Markets Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
