I almost always trade the opening.I make most of my money on the opening. If futures are up most will fly on opening if they are going to do anything at all. Some will gap down, you just wait a couple of minutes get in at the low and ride it back up. You have to be damn fast but many times I have made enough money I just quit for the day and go to the beach....beats sitting at the screen all day trying to catch a few bucks. Works for me anyway.
Do you trade the first ten minutes?
- Thread starter Eight
- Start date
Sounds clever, but the reality is when the smart money buys the open the stock goes like a rocket and as you can see by reading this thread, the amateurs tend to sit on the sidelines. 5 mins after the open and most of a big move in price and volume can either be over or you risk getting caught in a sizable retracement.
But taking up the point of buying the close... yesterdays action, volume and how it closed can provide excellent clues for the open. This is especially true if it's a gap open as the amateurs mistakenly play for the gap fill and miss the clues in yesterdays closing session.
There are a host of clues to read from prior decisions at this level such as prior volume action, S&R on last 2 days, sector strength, index direction, globex action, relative strength in sector, momentum, PA signals, market structure etc., etc.
If you thought the pros controlled the game it's not an excuse, just trade stocks at the price and volume levels they are not interested in. Getting filled with big volume is a problem so as an amateur you can turn this to your advantage.
There's nothing wrong with choosing not to play the open. But if you avoid it because you think it's all noise, then you will experience lots of times when you are in a trade and you read it as noisy when it's giving good quality signals, so perhaps further investigation might help your bottom line.
By the way, I mentioned Ken earlier in this thread. I had no idea that he is posting on ET. Genuine guy.
Quote from jack hershey:
There are two aspects of the open which must be considered.
1. Yesterday
2. The premium
Consideration of yesterday.
I check out about 32 items. I call it a preflight check. By knowing what is going on in terms of "how the market works", you get a thorough context. By filling in the blanks on the sheet, I have to look to where to get the value, do the calc's and write, with a ball point, the value entry after entry which brings me right up to preopen housekeeping.
There is also the day's upcoming new information in the form of standard reports, etc. I have quantification of their effect on what I trade and it moslty relates to the cascading levels and how many will occur as the IB close out accounts. The best and most significant cascading was 27FEB a while back. reading the stalls was intersting but most of all reading the DOM's level of imbalance and lack of orders was fantastic as a statement. I camtasia'ed the whole nine yards and did a voice over for the archives.
The Premium.
Information provided by the interrelationship of the cash and the index is priceless. The premium is calculated and its directional offset is in itself a wonderful indicator.
The considerations include:
1. How long it is out of whack during the open.
2. The damping mode (3) of how the vanishing point is reached
Then you come to "reading the premium" after this synchronization ends the random walk and chaos theory applications.
3. Volatility compression and expansion begin to play as a record of smart money leading the herd.
4. Drift enters the picture and it drives a lot of bots and algos
5. Leading indications of high velocity trader trends
6. Sustaining indications of trends.
7. Strength of trends.
8. Trend ends and trend reversals
9. Non trending
10. IB's taking small traders out of the market as they blow out (cascading).
For reporting and planned news there is another series of reads, mostly known combos of the above.
Reading premium is one of the best leading indicators of price. It rates as high as the leading indications of price turns on the DOM which come into view 5 ticks off the BBID/BAsk pair. Ir rates with reading pair shifts on the OTR tick charts or reading PRV on volume Gaussians of leading markets of the market where price is traded.
I'm sure that's entirely all brilliant.
I have a choice, either learn that and do it every day or hit the snooze for ten minutes... gee, can't decide here.. ok, no offense, but seeing as how I'm fine the rest of the day, maybe the open is just not that important... at 6:30 Pacific time.. I can barely see the charts at that time of day... that's probably my real problem... there is some serious money to be made early in the day but what a task...
I can just see myself sitting at the desk at 6:00 am with a worksheet like that... all blurry in front of me, the pen in my hand but the hand not wanting to respond to tasks other than reaching for the coffee... it happens...
I myself prefer the opening and close of the session. This is with GC, someone else might have different results.
Today was easy to read, trading the Dow Mini here.. there was economic news regarding US employment stats that was way better than estimates. The thing is, that report typically does not move indexes... the overnight traders traded it way up pretending to not know that it was a non-event, or maybe not really knowing it was a non-event, then at the open the real trading started and the price fell... I'm starting to get the drift here...
I too have been quite burned trading openings. I do it, but need a very big movement from the opening price to do it.
Sometimes I've bought stocks at $1 that, for example, opened at $1.80, and then I sold them at $1.60 or $1.70 within 30 seconds. Nothing for me is free money but this is as close as I ever get.
This big a move doesn't happen too often, but smaller opportunistic moves do, and the chance of something like this happening is greatest right after the opening.
(a side note though, the greater the sudden movement like this, the greater chance the nasdaq or nyse will cancel the trades calling them "erroneous prices", leaving a trader with a huge losing naked short if they took their profits too early...this has happened to me too.)
Sometimes I've bought stocks at $1 that, for example, opened at $1.80, and then I sold them at $1.60 or $1.70 within 30 seconds. Nothing for me is free money but this is as close as I ever get.
This big a move doesn't happen too often, but smaller opportunistic moves do, and the chance of something like this happening is greatest right after the opening.
(a side note though, the greater the sudden movement like this, the greater chance the nasdaq or nyse will cancel the trades calling them "erroneous prices", leaving a trader with a huge losing naked short if they took their profits too early...this has happened to me too.)
