The final hour of trading is where things get interesting. Volume picks up, market makers adjust their hedges, and traders either lock in profits or get squeezed.
If you know what you’re doing, there’s money to be made. If you don’t, it can turn into a mess fast.
So let’s discuss how to protect yourself…
The Pros of Trading the Final Hour
- Increased Volatility: The last 60 minutes can see major price swings as institutions close positions and traders adjust for the next session. If you’re on the right side of the move, it can be a quick and profitable trade.
- Clearer Direction: By the final hour, most of the day’s trend is already established. If a stock has been strong all day, odds are it’ll stay that way into the close. Same with a weak stock — momentum usually carries through.
- Better Liquidity: Options pricing can tighten up, spreads can narrow, and fills tend to be smoother. Whether you’re trading shares or options, executions can be more efficient in the final stretch.
The Cons of Trading the Final Hour
- Market Whipsaws: Just because a trade looks good at 3:30 p.m. doesn’t mean it’ll look good at 3:59 — especially on monthly options expiration days (the third Friday each month). Big players can push price around, especially if they’re managing large positions or option expirations.
- Limited Time to Recover: Unlike a mid-day trade, there’s no time to adjust if things go against you. If your stop hits at 3:55, you’re either cutting the loss or carrying risk overnight.
- Overpriced Options Premiums: If you’re trading short-term options, the final hour can see premiums fluctuate fast. Sometimes it’s better to wait for expiration day when theta decay forces better prices.
How I Trade the Final Hour
I keep it simple. If I’m in a trade, I watch key levels into the close. If I’m looking for new trades, I focus on market structure.
For example, if the S&P 500 (SPY) has been grinding higher all day, I’ll watch to see if it holds strength or rolls over into the close. If price is hovering near key support or resistance, I might look for a fade or breakout.
And if I’m trading options, I check order flow. A strong push into the close can be market makers delta-hedging for the next session — a clue that momentum might continue.
The final hour isn’t for everyone. If you don’t have a plan, you’ll get caught in the noise. But if you know what to look for — trend continuation, liquidity and key levels — it can be one of the best times of the day to trade.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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