TIME OF DAY

Market participants, especially floor traders, are the cause of periodic movement during the day. Angas called these the “tides of the daily prices.” Over the years, the great increase in participants has added liquidity to each pit but has not altered the intraday time patterns.
There are a number of reasons for the regular movement of prices, Because most of the daily volume is the result of day trades, those positions entered in the morning will be closed out by the afternoon to avoid the need for the margin required of positions held overnight. Orders that originate off the floor are the result of overnight analysis and are executed at the open. Scalpers and floor traders who hold trades for only a fewminutes frequently have a midmorning coffee break together; this natural phenomenon causes liquidity to decline and may result in a temporary price reversal. All traders develop habits of trading at particular times. Some prefer the opening, others 10 minutes after the open. Large funds and managed accounts will have a specific procedure for entering the market, such as using close-only orders.
A day trader must watch certain key times. The opening moments of trading are normally used to assess the situation. A floor trader will sell a strong open and buy a weak one; this means the trade must be evened-up later and thus reinforces the opening direction. On a strong open without a downward reaction, all local selling is absorbed by the market and later attempts of the locals to liquidate will hold prices up. In any event, floor trades can be expected to take the opposite position to the opening direction, usually causing a reversal early in the session.