Do you notice that selling pressure usually starts to emerge from 3pm and usually lasted about 1 to 1.5 hours? I believe there are 2 reasons for this:
1. Force selling by brokers because someone have forgotten/refused to pay for the shares purchased.
2. Unwinding of position by day traders.
So, what can we do with this fact? I think this depends on your comfortableness. One can buy if the trend is up (if you have the confidence that your analysis is correct). Or one can wait after the selling pressure has subsided for a clearer picture (if you are not so confident of your analysis).
One thing for sure, if you bought in the morning and the price starting to slip in the afternoon, don't get panic (yet), go away and have a cup of tea (since it is tea time) and come back before the market close to see what has happened.
1 comment:
Yes, forceselling is in between 3 to 4p.m. The worse is when there is a lot of volume. Time to take advantage for those active stocks. This is because the price goes lower. But make sure the stock can recover.
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