I am new to this site and fairly new to daytrading. I have some questions about trading before the opening bell and at the start of the opening. I have read to stay away from the open for anywhere to a half hour to an hour to let the program sellers get out and let the stock patterns start to evolve. Is this true, and if it is, what is the correlation between before hours trading and the open? Is anyone that is willing to trade in before hours taking a risk that their stock will be slammed by the program sellers/buyers?
Trading in before hours trading
- Thread starter tttinvest
- Start date
I appears you are in stock trading, and I am a futures trader, but I can tell you that the system I trade uses the overnight pattern to setup the first trade in the day session.
Actually I was in individual stocks, but they seemed to be greatly effected by events particular to them. I found that trading the futures seemed to add more "predictability" to the situation as the moves were smoothed over 500 stocks.
Don't get me wrong, there's still enough movement to make great money, but I don't care nor need to know, what any stock, or the company behind it, or industry, is doing.
No more "homework".
I don't know if this helps you at all, hope so.
Actually I was in individual stocks, but they seemed to be greatly effected by events particular to them. I found that trading the futures seemed to add more "predictability" to the situation as the moves were smoothed over 500 stocks.
Don't get me wrong, there's still enough movement to make great money, but I don't care nor need to know, what any stock, or the company behind it, or industry, is doing.
No more "homework".
I don't know if this helps you at all, hope so.
What you read is a bit silly....a major part of the money made is made at the open. Don't trade "pre markets" (of course)....you may want to check my threads on "opening only orders" in the Journal section. Those that wait "for setups" miss all the action.....we try to divide the day into 5 specific time frames. Opening, Post Opening, Mid Day, "Noon balloon" (pacific time), and Market on Close imbalance time period.
There are, of course, different strategies to invoke during each time frame.
Good Luck!!
Don Bright
Although what Don said is correct, in the case of a relatively new trader who is working on his own, not in a group with more experienced coaches, the opening 30-60 minutes are worth avoiding (until you have a reliable system worked out, at least) just because figuring out whether the market is actually headed up or down at any point in that hour is extremely difficult to accurately determine.
There's truth to what Gd2kno has written also: Trying to pick the right individual stock is like trying to pick the right number on a roulette wheel. You can still make a decent profit with much less risk of missing, by correctly betting on either the 1-18 or the 19-36 half of the roulette.
RE: ". . . stay away from the open for anywhere to a half hour to an hour to let the program sellers get out and let the stock patterns start to evolve."
Every so often this statement pops up again. From a scalper's perspective, it's BS. If you want to trade the open, learn how to trade the open.
RE: "Don't trade "pre markets" (of course)...."
I disagree. If you want to trade pre-market, learn how to trade pre-market.
tttinvest, in addition to what you've already heard, you'll also eventually read somewhere that you shouldn't trade the mid-day dead zone, and then shouldn't trade in post-market, and probably some other times too. The thing is, each time of day has different characteristics, event influences, and risks. Whoever wrote "don't do it" evidently found the risk or challenge too much to bear. All times are traded very profitably, you just need to put the time in to develop the understanding and strategies necessary to deal with the challenges presented during different times of day.
RE: What is the correlation between before hours trading and the open?
If you mean predictable follow-through from premarket to regular session, really, anything can and does happen. The variables are infinite. If you put the time into it, you will find correlations and repeating behaviors, but there's no sure thing that I've found. At your stage, I think you're better served learning to react rather than trying to predict.
RE: Is anyone that is willing to trade in before hours taking a risk that their stock will be slammed by the program sellers/buyers?
Maybe someone familiar with institutional program trading can answer this as to how much actually goes on in premarket. I don't know. I've seen a few weird things that might have been attributed to that (or some guy's elbow on the button), but it's really not a factor as I see it. Compared to the slamming you can get from news in premarket, program trading is a total non-issue.
Really, from a scalper's perspective, program trading is a non-issue at any time of day. When price reverses, you reverse. If they're running it up or down, take advantage of it. If your stop is hit, get out.
Every so often this statement pops up again. From a scalper's perspective, it's BS. If you want to trade the open, learn how to trade the open.
RE: "Don't trade "pre markets" (of course)...."
I disagree. If you want to trade pre-market, learn how to trade pre-market.
tttinvest, in addition to what you've already heard, you'll also eventually read somewhere that you shouldn't trade the mid-day dead zone, and then shouldn't trade in post-market, and probably some other times too. The thing is, each time of day has different characteristics, event influences, and risks. Whoever wrote "don't do it" evidently found the risk or challenge too much to bear. All times are traded very profitably, you just need to put the time in to develop the understanding and strategies necessary to deal with the challenges presented during different times of day.
RE: What is the correlation between before hours trading and the open?
If you mean predictable follow-through from premarket to regular session, really, anything can and does happen. The variables are infinite. If you put the time into it, you will find correlations and repeating behaviors, but there's no sure thing that I've found. At your stage, I think you're better served learning to react rather than trying to predict.
RE: Is anyone that is willing to trade in before hours taking a risk that their stock will be slammed by the program sellers/buyers?
Maybe someone familiar with institutional program trading can answer this as to how much actually goes on in premarket. I don't know. I've seen a few weird things that might have been attributed to that (or some guy's elbow on the button), but it's really not a factor as I see it. Compared to the slamming you can get from news in premarket, program trading is a total non-issue.
Really, from a scalper's perspective, program trading is a non-issue at any time of day. When price reverses, you reverse. If they're running it up or down, take advantage of it. If your stop is hit, get out.
You are right, the variables are numerous, but by limiting yourself to certain situations, you can isolate cases where that number becomes more or less manageable. And yes, there are cases where follow-throughs are more likely to happen than not. It depends on the size of the company and a bunch of other factors I'd rather not get into
Definitely do it. I've bought stocks $3 below the previous close on no news.
I disagree with Don on this. I trade at 4am if possible (PT),
but after 5 (8 ET) the field gets crowded. A lot of prop traders don't have access to INCA until 4:30 or 5
I disagree with Don on this. I trade at 4am if possible (PT),
but after 5 (8 ET) the field gets crowded. A lot of prop traders don't have access to INCA until 4:30 or 5
No.