After hours and premarket trading/algorithms and institutions - some insight. I shared this on MTA voice the other day.
To start, AH and PM trading is wonky as is because traders can manipulate prices to an incredible degree. Most algos and institutional trading turn off during PM and AH, and the volume is MUCH thinner, so larger retail traders can actually drag prices as they wish, to a degree.
How this works is through level 2 - they can set up asks that are incredibly far away from the current market price and smash through all the current asks, while also propping up bids higher and higher. Others pile on and this moves the price up significantly.
With this, bystanders bid, thinking the stock is running nonstop and this is how price can be heavily manipulated. For some devils advocation, there's only so much they can do this because market makers' jobs are to keep prices within ranges. Hence, prices won't go to the moon
Now, let me explain the most important piece of information with this and why it's useful to know. A lot of times you'll see some traders tweet at 8:01 p.m or just before PM in an attempt to force a stock to gap up. What this does is catch algorithms and tute eyes onto it
From there, the stock plays around a bit during PM and then when market opens, the stock usually flushes into a demand zone because tutes/algos short it down to get in. Shortly after, you'll see that stock rip face all day after tutes have loaded up.
It doesn't matter why the stock gapped up - if it gaps, it catches algos and tutes and usually rips intraday. This is one of the ways I know which stocks to play during the day, regardless of if a stock had news or not and how good any news may have been.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
