Important Market Factors that affect Day Trading : NobleTrading Blog

Wednesday, June 18, 2008

Important Market Factors that affect Day Trading

Day trading includes quick response to changing market conditions. A day trader must look at various market factors to find a trading opportunity or to close a trade with minimum/no loss. Here are some factors which affect markets and stocks on a daily basis.

Oversea market performances: The opening hour of American stock exchanges are heavily influenced by the market performances of Asian and European markets, which have already/almost ended their trading day.
Overseas economic news and data: News regarding overseas individuals, policies, companies, industries and economies can affect stock prices at any time.
First hour rush: The first hour of a trading day is often noticeable for higher trading volume as most individual and institutional traders try to react to news.
Futures data and prices: Price changes of futures contracts, especially index futures, can be an indicator of stock market changes. Also futures trading starts before stock market trading.
Company/economic reports, and analyst reports and ratings: These are the main factors which determine market/stock performances after the morning hour.
Mid-day volume decrease: Often at afternoon, because of scarcity of new news, the trading volume decreases and stock prices decline.
Position closing at afternoon: Many traders, especially day traders, start liquidating their open positions from afternoon in order to avoid/limit over night risks. This is more prominent in Friday afternoon.