What is the accepted explanation for wild swings at the close?

[OTCkrak]

Is it just end of day fixing and day traders closing out positions?

Im new to AG futures and noticed that often enough near the close at 1:15cst a market will make the most significant move of the day in the last few minutes. Either breaking out to new highs or retracing an entire days trend.

This appears to be different from what Im used to in financial futures/stocks. Anyone have a theory on how to exploit this or a general pattern that emerges?

 

[nazzdack]

----1:15cst....
----most significant move of the day in the last few minutes.
----different from what I'm used to in financial futures/stocks.
----how to exploit this....
----general pattern that emerges?

1) You can try to "project" a trend continuation forward.
2) You can try to "relate" the last 15 minutes of range to the magnitude of the range of other time segments during the session.
3) Can you tolerate open positions when the market is closed from 1:15pm until 7pm?
4) You can try to "bracket" the market, i.e. pick tops and bottoms, and hope for price reversals. based upon range expectations.

 

[trade_canada]

I don't have any data to back this up, but my guess is that it's either large risk removal or banging the close (manipulating price to profit from positions in related derivatives)

 

[Rachmaninov]

I have no answer to your question specifically.
However, most statisticals study show that volatility is closely linked to the volume traded (the open question is what is the cause). Secondly, volume tends to be spread in a U shape during the day (higher volume at open & close).
Then, having wild swing is at open/close makes sense.
I would also bet than the U shape volatility/liquidity thing is more important in low liquidity markets (the players "meet" at open/close").