Thursday, December 11, 2008

WHY I ONLY TRADE THE OPEN AND THE CLOSE





Here is a perfect example of why i ONLY trade the open and the close. Opening will give lots of imbalances from the breaking over night news or emotions left over from the previous session. The close that's where the PROS are squaring off their positions and that's where you will either see acceleration of trend or a reversal from the previous trend. The rest of the day is just small choppy sideways movement that will just cause headaches and over trading with little gains and probably just losses. This is NOT true for every trading day but a fair amount. Trade the open and the close and look for reversal or acceleration because that IS tradeable, and forget the mid day chop.

peace.

10 comments:

sloth said...

Hi. Yes midday chop is the much, though there was a great entry midday for a decent and predictable run at the 11:30 candle after that reversal candle.. But I agree with you for the most part on the general trend..

I do however like when there is midday low, but steady move.. That hasn't been the norm lately.

-sloth

Ragin' Cajun said...

Good advice.

Momo Stock Trader said...

Stewie,

I agree that lately, the first and final hour are where the big moves are. A while ago though, the first hour had a lot of chop, and then a strong tend would emerge, and at the end of the day that trend would reverse or taper off. So things seem to shift subtly over time, sometimes.

Also - why do some people call the first hour amateur hour, and say to stay away from it?

Stewie said...

momo: amatuer hour would be the best hour you would think, NO? think about it, amatuer hours would be full of mistakes to take advantage of. so, take advatage of amatuer hour by doing the opposite and ride the coattails of the pros later.... fantastic!

gamingthemarket said...

People come home after work and place their bets for the next day.
Officially it's called amateur hour because retail trades, often market orders, are filled at the open.

The market makers who fill those orders set the opening price. They have a fuller picture and will gap price to cover their order book while creating a liquid market.

Another aspect of the open are specialists who use this opportunity to start filling their book for the day. They often have limited time to push millions of shares.

The close is where funds will often clear their order book and bank intraday differences.

Then there's dark pools...

A ton of positioning and agenda gets worked out in very short periods. That's what I heard anyway.

Anonymous said...

but how do you know whether it's gonna go up or down during the first half hour?

Justin said...

Stewie..came across your blog via Wall St Warrior. Great blog! I have added you to my blog list over at tradingstockz.blogspot.com You make the difficult seem that much easier. Keep it up! Justin (A fellow Pacific Northwester, I grew up in Seattle)

Stewie said...

gtm: excellent explanation. thnks dude.

welcome justin!!

anon: that's the tricky part and where having a game plan ready is helpful. for example: i am looking for this news driven day, mostly very bad news, i think the mrkt will likely stay down all day. i will be looking for an oversold bounce off the open and then will try and position some shorts.

Tyler said...

Hey Stewie, a trading course, and mentoring program by you would be a great idea. I agree, the opening and close, are good for momentum and less games are played. If you look at SRS yesterday, it just sort of went up the whole day, how would you play that?

Cliffynator said...

Hey Stewie!

Glad to have you back!

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