There is a lot to know and understand about the behaviour of a market at the Open and at the Close. This is topic of rich interest, undoubtedly. It is intriguing when it is said 'Amateurs play the Open; professionals play the Close.' Presumably amateur means individual traders, prop or independent, and assorted others? Presumably professional means the funds and institutions? By Open I mean the first hour and half and by Close, I mean the last hour and half of the market. Take the Dow, most often the day high or day low can be captured in the first hour and half .. not always just mostly. Perhaps I should give an example with my own focus. I have my own system for scooping out the difference between the hi/lo or lo/hi pattern of the day. So my focus is on the Open period and I just use the rest of the market day to work out my system each day. I only need or want to day trade so thats what I do; also my targeting is on the maximum each market day gives and in my case the instrument is the DOW. Is it true therefore that 'Amateurs play the Open; professionals play the Close.'? Do you prefer the Open to the Close or vice versa?
Opens and closes are both sweet, except only play momentum. That sell at ask/buy at bid crap will get you in big trouble, save that stuff for the midday.
A big factor in the trading times is, of course, the rules involved. The close (mOC orders) generate interest because of the institutional requirements. Openings draw both institutions and traders. The retail types (you call amateurs) play more during the day when there is lower trading risk. They trade more long term than traders who do this for a living. I prefer to say "retail" vs. "professional" instead of "amateur" -- since many retail traders do actually trade for a living, so categorizing them as amateur wouldn't be fair. Regardless, the first 90 minutes and the last 90 minutes are most opportune times for most traders. The mid day trading needs to be well planned and tends to be more "mathematical"...i.e. pairs and arbs (from the licensed ranks)... Don
Open is great, I dont understand what you are trying to say. Less volume is needed to make big moves on open. Also, there seems to be a higher priority for institutional orders when it comes to how fast they are filled. Seems like if you need to trade some big client orders in the morning, you need to get them filled ASAP. Thats why you see stocks drop/rise a ridiculous amount in the first 15 min on little volume. At the close, too much is going on sometimes. Late institutional orders popping in here and there, sometimes completely halting the momentum. A bit trickier, in general smaller moves and a bit harder to read. At least for me. But also seems a bit safer, so there is an upside. I completely do not get the amateur/professionals quote. I think it takes more skill to trade the open successfully.
"I completely do not get the amateur/professionals quote. I think it takes more skill to trade the open successfully." i think this means that mom and pop amateur investor hears about a cancer cure on the news and all put in their orders at the open and the specialist opens the stock and sells to them at the high of the day.
Does the 'professionals' (funds and institutions) use MOO an MOC orders? I dont think it because market orders seems no 'professional' and involve too much price risk. So who uses MOO and MOC orders? I ask this question because I'm trading my own strategy using this type of orders and I've noticed than volumes on the open and the close quotation (NYSE) seems very irregular, so I dont know when I'll generate hidden 'slippage' on this quotes by the size of my order (for example 10,000 shares of AMD on MOO/MOC). Thanks for any enlighten and good trades to all.
One of my favorite pattens usually occurs between 10:30 and 2:00. I look for good (not necessarily fantastic) volume versus the 50 day average and an intersting chart (new high, breakout from consolidation, bounce etc...) I then look for intraday breakouts. A good example today was WFII. Gave a couple of good entries.
Two very popular orders are the market on open (MOO) and the market on close (MOC) orders. These are market orders that are executed on the open or close. MOO will be executed in the first 30 to 60 seconds of trading and must be within the opening range. A MOC order will be executed in the last 30 or 60 seconds of trading and must be within the closing range. Many people believe that the opening and closing are the most significant prices of a trading session. Academic theory suggests that these are important because they represent the accumulated concepts of market participants as they adjust to overnight factors on the opening or as they try to predict what may happen overnight on the close. Many technical and mechanical trading systems use MOO and/or MOC orders. They do this because the opening and closing prices are recorded, whereas intra-day prices are often not recorded except when they are the high or low.