5.28.2015

On Market Liquidity, High Volume Trading Periods; and Low Volume Stocks




NYSE Looks to Ease Late-Day Pileup - Exchange plans midday auction for thinly traded shares
Excerpt:

For investors trying to buy and sell shares of smaller companies, a lack of liquidity can mean big money lost. The goal of the auction is to give retail and institutional investors alike an opportunity to trade shares without unduly affecting prices. “The fact that more trading is happening on the open and close today than in the past is a symptom of a larger problem, which is that the market is so fragmented during the day,” Mr. Farley said. He said it is “difficult for investors to find moments of true and deep liquidity.”
Stock-Market Traders Pile In at the Close - End-of-day surge in action boosts costs at other times, increases vulnerability to sharp swings
Excerpt:

More than one in six trades in S&P 500-listed stocks took place between 3:30 and the 4 p.m. closing bell last year, according to an analysis by Ana Avramovic, trading strategist at Credit Suisse. ...... For shares of smaller companies, 19.3% of trades were in the final 30 minutes, up from 14% in 2007. That is important because it can often be difficult for investors to trade smaller-company stocks without pushing the price up or down. Even the closing minutes of trading have become more crowded. The final five minutes accounted for 6% of all volume last year, rising each year since 2010, according to Trade Informatics, a trading-analytics firm. During the day, “people are watching the paint dry,” said Leonid Hmelnitsky, head of equities trading for Mellon Capital Management, a San Francisco money manager with $404 billion under management. “We’ve definitely seen the shift.”
Comment: Things I've never thought about. I tend to trade right out of the chute. I have some money to invest ... I move it to the brokerage account .... and trade by 9 a.m. Central. Maybe I shouldn't?!




1 comment:

  1. I used to buy right at 9:00, but I got burned every time when the price moved lower and lower throughout the day. On a few occasions that was the right choice, as the price only moved higher, although usually not.

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