Sunday, June 1, 2014

Is This The Common Pattern of Daily Volatility Of Stock?

stocks or shares volatility
I am only 3 months young in really trying to understand the local stocks market, so whatever I am going to share next is purely my own observation and hence need some "old bird" masters/sifu to give me some correction/input on my observation ;-)

Through my three months short tenure in observing the market trend, I noticed that there is a common pattern or trend of volatility (as well as volume traded) within a typical trading day. To me, it (the trend) can be depicted as per the simple chart below:


In short, it is generally more volatile during the first one or two hours and last one or two hours of a typical trading day. Some of the reasons that I could think of are:

1. The spill-over effect of the trades from previous trading day;
2. The investors gotten some buzz/market news and hence trying to catch the opportunity as early as the market is opened;
3. Active Traders (or Day Traders) are forced to "close" their daily trades at the end of the trading day.

Of course, for value investing, there is no real impact as to when we trade as we are looking at the long term and such volatility might have minimal or no impact to our holdings.  

What is your view on my interpretation above.

Cheers!

P/S : As I mentioned earlier, I am still pretty young in the shares investment arena, this so-called pattern might have been a well known fact, so, pardon my ignorant ;-) 

4 comments:

  1. Replies
    1. Eye white shut Thanks for the short and powerful comment. I am sure there are lots to learn from you then

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  2. great Work , i appreciate very much your written work . Epic Research will look forward to latest update .

    ReplyDelete
    Replies
    1. Mayank nayak : thanks for dropping by and nice words!

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