In the last five seconds of the trading day at the end of the month (or quarter) traders prepare for a no-holds-barred-give-it-your-all-no-excuses market free-for-all-explosion.
Sometimes, it’s ugly.
High speed trading means that traders can get incredibly precise with their execution, down to millisecond. The faster trading technology gets, the more trades can be piled into tinier fractions of a second.
The result is the chart below brought to you by market research firm Nanex. It shows the explosion in E-mini trades (S&P futures contracts) that occurs at the close of the trading day at the end of the month (or quarter), compared to E-mini trades at the close of a regular old trading day.
Blue diamonds represent the end of the month, and red ones represent the end of a quarter.
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