• When Trading the Open,

      Look to the Previous Close

      February 2015 | Trader Trends

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David Rappaport

Execution Consultant

Bank of America Merrill Lynch

When Trading the Open,
Look to the Previous Close

When stocks experience large overnight gaps, patterns can emerge in the early morning trading period. Volume profiles tend to skew to the open and participating can be an effective way to capture liquidity. Additionally, in the minutes after the opening auction, we often see the short-term price impact of the gap reverse.

 

"If a large overnight move is expected, use the move's direction to help decide if you should participate in the open. We recommend using one of our algos that participates in the opening auction such as Instinct® 2-4."

– David Rappaport

  • This report is for:
  • Equities Traders
  • Portfolio Managers
  • Head Funds
  • Hedge Funds
  • Long Only Funds
  • Pension Funds