why is the stock market so important
It's that time of the month for traders -- the end of the month. The thing is the today as intensifies along the eastern seaboard. The last time the NYSE closed down because of weather was for. One of the huge questions being asked by traders and investors is "When will the markets be open? "
In fact, some are concerned about whether the markets will re-open before Wednesday, October 31st. That's because the last trading day of the month is a very important time for people across the financial services industry. The reason, a New York-based trader explained, is end of month is when settlement occurs to determine market performance, fund performance, trader performance, which are all based on the final settlement prices. So for example, if a hedge fund needs to send out statements to their investors outlining their performance, if they hold a number of positions, they will need the exchange to be open. It is more preferable for them to have the most recent settlement prices as possible to best reflect their performance to investors. What's also critical is the desire for mutual funds and hedge funds to square away end of month positions based on asset allocation models that they have. While this is more prominent at the end of the quarter, this still does play a factor at the end of the month as well. Stock market close price is an important piece of information that is veryPuseful for every short-term trader.
The close prices areP very importan t, especially for swing traders and position traders. It also has implications for practical day trading in many day tradingPsystems. There are several ways to monitor stock market close. It is possiblePto check only close prices on some online websites that provide this information. Another possibility is to check live or delayed price charts. Such charts are available in any good charting software but it is also possible to use charting features of good market websites. There are morePtypes of price charts. The last i. e. close pricePcan be charted using line charts, but this is not a very usable option. ThePbest option is to use candlestick charts. Candlesticks provide a lot ofPinformation that can be used for analysis, research and trade management and stock market closingPprice is among them. The stock market close price level provides very importantPinformation about the general mood of investors. It tells a lot about the thinking ofPbig investors that allocate large amount of money into the stock market forPtheir asset management purposes. It is known that big investorsPuse the last few trading hours for their positioning. I am notPsure if it is mentioned in materials during typical training but big price moves happen by movement of bigPasset allocators like big mutual funds, big insurance companies, hedgePfunds, etc. And it is known that they prefer to arrange their decisionPin afternoon trading just before the stock market close.
They want toPincrease buying or selling during the last couple hours of trading. We asPsmaller traders want to know what these big investors do. And it canPbe seen by monitoring stock market close prices. You can check close price of anyPmajor indexPif you want to know the broader intentions of global investors. AndPit is possible to monitor just the closing prices for any particular stockPor sector to analyze behavior of investors in reference to thisPindividual share ticker. Is there heavy buying into the market close? Are investors bidding pricesPall the way up to the stock market close? This is a sign of very bullishPinvestor opinion about these particular shares. It couldPbe quite safe to buy these shares too. Especially if you have alreadyPprepared some online trade setups in advance and are already monitoring share price movements during the day. The day tradersPuse such bullish close of the market to allow some holding of theirPposition to the next day. The typical expectation is that shares with strongPbuying interest into market close could be trading much higher the next dayPimmediately from the open. Some of these day traders or short-termPtraders would also usePpremarket trading hoursPto close trade and make profit based on such expectations. ThePopposite is true for stocks or sectors where a weaknessPemerges in the last two hours before market close.
These shares provePto be sold by big money managers. This can be good if we plan to havePsomePshort sell tradePwith these shares. But it should be a warning sign if we hold long (bullish) positions in such a symbol. Exchange traded fundsPare different equities that are traded on US exchanges. PAlthough they are also traded and their prices move with buying andPselling, the calculation of fair price for any exchange traded fund isPlittle bit different. These ETFs typically represent some basket of stocks that they hold in a portfolio. So the fair price of an exchangePtraded fund is calculated intraday and also on closing basis. This fairPprice is based on prices of stocks in the ETF portfolio. The value ofPsuch exchange traded fund is known as NAV (Net asset value). It can bePa little different during a trading day. But final closing price shouldPnot be very far from calculated NAV. But you can find somePexchange traded funds where you can find quite a significant differencePbetween stock market close price and final NAV for the trading day. ThesePexchange traded funds are mostly very illiquid and very thinly traded. The example above showsPcurrency ETFPforPIndian RupeePthat is not traded too much. Its daily trade volume is very light. SoPit is much better to monitor the price chart of its NAV valuePthat is automatically calculated every trading day.
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