This is just a fun theory from me. I'm not 100% familiar with stocks so can someone explain this to me;
Apparently, no institutions trade the pre and post market trading hours (ETH) and there's very little volume. As we know volatility is the direct result of volume (and liquidity).
So here's a scenario:
Stock XYZ is in a downtrend and everyone is shorting that fucker for all it's worth. Let's say this stock has the market cap of $60 mil. I imagine you could cause a MASSIVE spike with something like $5 mil on the long side, with market order longs in the pre/post market. Plan would be to trap all the institutional bears so when they wake up and see how fucked they are, they'd start covering their shorts, causing even more of spike in price.
GSIT is a stock like that. $60 mil cap, almost no volume.
Someone please clear up this Extended Trading Hours situation with me. I see all these gaps in stocks and I'm still wondering there's very little volume and sometimes a lot of volatility. Do institutions close all their limit orders through the night or what exactly is happening here? Would love to know exactly how gaps work, thank you.
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