73% of all market movement is gapping and first 15 minutes

6 Jun 2020

For the most part it seems that you need to enter your buy/sell at the end of the day before close. If you do your analysis at night, then make your orders for the next day you will always behind the curve. The premarket will already set all things in motion for the next day. If your orders go in at 9:30, then you will get caught up in the gapping and initial wave of reaction. Its too late at that point. Sometimes the market will gap and within a hour or so return at least the first 15 minute bounce, but rarely does the gap get retraced. Plan your orders during the morning and day, then enter before close.

After hours trading is what really sets the market for the next day. Day trading is just for show. There is almost always a 2x compounding action of the gap move within the first 15 minutes. After that, the market usually just moves sideways. There are a few rare occasion the market can move noticeably in the day and maybe over two or so days. Usually though any gains or losses tend to revert themselves by the end.

In case it was not clear, all major market moves happen on gaps and the traders response in the first 15 minutes.

My guess is that large institutions do all of their buying/selling off hours when the volume is lower. They get more bang for their buck that way, I guess.

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Day trading after first 15 min only accounts for 26% of gain up in a rally
Gapping and first 15 minutes = 73% of all gains
Gap vs 15min is about equal
Gapping = 36.5%
First 15 min = 36.5% (reaction to gap)
Tops and bottoms (last little bit after gap < 1%) are always a result of day trading

CHART

• Bright green = gap up
  
• Dark green = first 15 min up
  
• Bright red = gap down
  
• Dark red = first 15 min down
  
• Blue = rest of day if it makes a difference in price