Wednesday, June 10, 2015

Open is Everything in Equities

Today has been a very slow day for trading so-called daytrader stocks.  The active stocks with big volume that are up big or down big.  On a slow day, the first 30 minutes of the trading day, from 9:30 AM ET to 10:00 AM ET become even more critical than usual.  This is especially true for a short seller who will find his best short entries on spikes higher in the first 15 minutes or even right at the opening bell.

If I had to rate the importance of the open on a scale of 1 to 10, it would be a 10.  The lunch time hour would be a 3, and the close would be a 5.  The pre-market/after hours trade I would put at a 7.  Yes, the pre-market/afterhours is more important than the close!  That is when all of the PRs and earnings news comes out, and that is the main driver for most daytrader plays.  That is why you can't just be ready by 9:30 AM and say you are completely ready.  You need to be there for pre-market, so it is preferable to start from 8:00 AM.

If all I did was trade equities, I would put all my energy into being totally prepared and focused for that 9:30 to 10:00 trade.  That means having your watch lists already prepared, game plan for each stock on that watch list, and price levels to sell or buy.

If you are a short seller, most of your entries should be during this 9:30 to 10:00 time period.  If you are a long only trader, most your exits should be during this time period.  Which means that it is much more critical for longs to take on positions overnight, especially if they are trading active stocks.

The trading day is like a microcosm for a trading year.  90% of the opportunities come during 10% of the time.  The open is the key for profitably trading equities.

1 comment:

Anonymous said...

Excellent move today in the treasuries. Well done and played.

I of course bot yesterday and sold today into the madness. Gotta take a 33% gain when it's given to you.