Home > Technical Topics > Strategy Development > HERE is how to make money consistently trading the open

HERE is how to make money consistently trading the open

  1. One of the most overlooked methods to making money consistently is the opening trade. At the open:

    1. Volatility creates opportunity in the form of price movement
    2. A daily high or low is generally created within the first half hour near the open price

    So, all a trader has to do is catch 75% of the ADR. The most important part is where you place your stop loss. For the answer, simply look up the definition of low-risk. Statistically speaking, I guarantee you will make money.

    QS
     
  2. Wow, a guarantee! Can't pass this up!
    lol
     
  3. VAGUE
     
  4. On ET new gurus are born on a daily basis. :D
    ET stands for elite you know.
     
  5. At the open place your stop loss where it is low-risk. I'll even provide the definition.

    low-risk: not likely to result in failure
     
  6. EXTREMELY VAGUE
     
  7. Also, I should point out to the actual retail traders on this site, do not listen to the naysayers. They are here to keep you in a constant state of befuddlement. Large letters don't make their posts any more factual.
     
  8. Wow...trading the opening range. This sounds like something new and never discussed...
     
  9. trading the open at least in my experience has been one of the harder things to do, especially consistently.

    Just yesterday I was bullish out of the gate, but if you look at the tape, it really came inches shy of making new lows before popping higher(albeit YM did make a new low)
     
  10. If your profit target is 75% of the ADR as I suggested, it would make sense to attempt a maximum of 3 trades per day based on the low-risk stop loss. Statistically speaking of course. Either long, short, long or short, long, short.

    For a $100,000 account, if you risked .5% per trade, your worse possible day would be -$1500 while netting anywhere from $500 to $1500 on an average day. Again, statistically speaking.
     
  11. you have made an auspicious start. thanks for mentioning.
     
  12. New a guy who mentored and sold a method trading opens, putting order to go long above and short below, he always got out best price despite huge swings lol fake obviously.

    Issues are, knowing when to take a loss and take profit, too soon on profit and wont cover your losses, too late and you'll ride it down.

    We got him to live trade and prove it, he picked a day where there was big later news so market didnt move and he closed up 5mins before lol
     
  13. Its hard for you to do b/c you were going against the trend on the 1 and 5 min, and hourly charts. You can't just randomly buy a falling knife and expect to have consistent profits. YOu need to wait for some type of confirmation for counter trend trades.
     
  14. sounds terrible

    you should do that on your live account for a week and post results
     
  15. I prefer The Opening Price Principle by Larry Pesavento. There is no need for intraday price bars.
     
  16. post your results of doing this trading style before making these unsubstantiated claims :finger:
     
  17. If you want to increase your win rate, naturally your average profit will decrease. Pick a direction at the open, long or short. If price moves in your favor, use any price turns to take the other side of your trade. This works best with two broker accounts. Your low-risk stop loss levels will never change.

    EDIT: It should read if you want to DECREASE YOUR AVERAGE LOSS which will decrease your win rate but also increase your average profit. For example, if you sell 5% of
    above the open as a percentage of ADR your PT becomes 80%.
     
  18. post your account with the results
     
  19. Toby Crabel wrote about this in his highly treasured book
    "Day Trading With Short Term Price Patterns and Opening Range Breakout."
     
  20. No need for a method just a statistic to base a maximum of 3 daily trades on.
     
  21. QuantTROLL
     
  22. Just use a BB band, M1 BB 20sma 2.0Dev, trade the break out from sideways markets before news/open.

    hint, chop will kill you :(
     
  23. Chop isn't even a consideration when you place your pre-open buy and sell stops at low-risk levels based on the very important statistic as mentioned.

    I am no troll. I'm one of the few, the proud, retail traders posting on this site.
     
  24. Post a chart/s with your method.
     
  25. Why would I post a chart of a single daily bar? At the opening bell, just add the put and call premiums for the nearest strike price to the open and you have the expected move. If it equals .70 that means they will close price very near either 70 cents above or below the open.
     
  26. Intraday charts are not used as a basis for trades. They are simply derived from information that should already be sifted through prior to the opening bell.

    The open fade gives a trader the chance to get in at a better price while minimizing risk as mentioned. Apart from the first 30 minutes to do so, intraday charts are useless.
     
  27. Actually there was already confirmation. Hence I was able to catch the lows and ride this nice rally. However it tends to hunt stops more so than normal part of session before taking off hence very tricky to do it on a consistent basis.
     
  28. Did somebody here just fart?
     
  29. The jig is up ye sir, mate, but you can fake talk shop all you want. I strongly encourage anyone looking for an edge to read my posts and ignore the rest. Feel free to PM or email me too.

    I HAVE NOTHING TO SELL. Just trying to save some aspiring traders time and a bit of mental capital.
     
  30. That's correct surf, ye, mate, sir. He didn't invent THE STATISTIC (or a bunch of aliases).
     
  31. Ok, just confirming its the same guy---

    Just wondering why you prefer him as a mentor over a verified and consistent retail trader who progressed to be a billion dollar fund manager?


    surf
     
  32. Open is volatile sure, but the bid ask spread of many stocks reflect this. How do you overcome this if you are not a HFT?
     
  33. So easy a caveman or cavelady could do it. The bar for calling ones self a quant just hit a new low.
     
  34. Apart from your initial trade, which has to be a breakout trade near the open, your goal is to buy below the open and sell above the open. If price moves more than 1-2 standard deviations past your open trade stop level, you no longer want to fade it. However, the opportunity exists within this zone.
     
  35. ET has a lot of standard deviants
     
  36. There is some validity to the basis of the argument put forth. In an efficient market scenario where there are no events of any type during the day, the price reached during the first 30 minutes can be indicative of the price for the remaining of the day.

    The first 30 minutes is usually spent trying to balance all the orders, depending on the volume. Once this is done, a good 'price' for the day can be determined.

    However, should there be *any* event during the day: Data, Systemic, Political, Corporate or even Insitutional, the price will then fluctuoate afterwards.

    So, in theory, in a vacuum, it could be accurate. Perhaps it would be useful mechanism 100 years (or maybe even 70 years?) ago, when there was little additional information made available during the day. But nowadays with the constant influx of information the price can change dramatically.

    It is possible to occasionally see what is being suggested nowadays, but that is more an indicator of a slow news day. If one can forsee days where there will be no events of any sort than one can more accurately determine the price. But then, that is almost the definition of an efficient market.
     
  37. ? What's the point of placing the stop loss at all if it's highly unlikely to hit? So I place my stoploss sell at -50%, which is very low-risk! :cool: Very helpful that stoploss...
     
  38. Wind-Up Thread.
     
  39. Statistically speaking, this thread has a very likely probability to hit the stoploss at the higher average daily range of nonsense.
     
  40. There is no wind up. Just facts. Statistically speaking, the naysayers here are the same content marketer trying to keep retail traders befuddled so they keep coming back to this site.

    The point of the stop loss level(s) is to define a reasonable amount of wiggle room in either direction, within 30 minutes of the open, before the market's main trend for the day which you are trying to catch.
     
  41. I've received numerous PM's and emails regarding this approach. Keep in mind a couple things:

    1. Your profit target and stop loss levels (exits) are FIXED, but your entries are not.
    2. You only need one account to trade with but a good visual is thinking in terms of a long only and short only account in which you are simultaneously long and short.
     
  42. Nitwits? People that don't have a brain for themselves?
    With this method you'd be f#$%ed in Hong Kong markets...
     
  43. Anybody else think quantfisher is surf?
     
  44. I don't think surf trades the open like that... or that he believes in stoplosses...
    And surf doesn't speak statistically :D
     
  45. Image1.png
    Had a quick look at the Larry Pesavento stuff and decided it was bollox. Its not like you, if you are who are who you sound like to quote such stuff. Obviously any time at which there is a burst of volatity can be traded, therefore its best to determine when those times will occur and be prepared. For example the DAX opens at 7am UK time but there is a burst of activity at 8am when the UK markets open. Shown here is the mean range every 15 minutes from 7:30am to 11am. I don't really care what the ADR is for the DAX, more important is knowing the typical range during the trading period and that momentum is more easily observed during that time. Intraday chart is a must as trading what price is actually doing is the only way.
     
  46. That burst is not because the UK opens but because the single stocks open trading an hour after the DAX futures open...
     
  47. upload_2017-4-1_9-5-42.png

    I proved years ago with the BUY ZONE, that trading stocks from the open price was a profitable strategy.

    hiop is daily high - daily open
    oplo is daily open - daily low

    The above display is for LONG trades open - high.

    The frequency distribution columns 0_9, 10_19, etc... so how many times over the last 100 days hiop fell into each range.

    The column 50 shows how many time hiop was .50 or more.
    The column 100 shows how many time hiop was 1.00 or more.

    Columns 50 and 100 show if you pick the right stocks to trade using this method, you make money. Entry is in the BUY ZONE of daily open + .10 and daily open + .19.

    Let's use FANG as an example.

    6 days out of the last 100, FANG failed to reach daily open + .10. No trade. Leaving 94 days.

    4 days out of the last 100, FANG only went to daily open +.10 to daily open + .19. We shall deem those losing trades. Leaving 90 days.

    Out of those 90 days, FANG went to daily open + .50 or better 82 times and daily open + 1.00 or better 63 times.

    The outcome over the long haul should be obvious to the reader.

    I call any stock that hits daily open + .50 over 79 times (80 or better) a "cow" as in "cash cow".

    Rather than using the same method on just any stock, I filter for the best performers and only trade those.

    1000 shares times $0.10 + $100. You can print $100 bills at the open using this method.

    View attachment 172300
     
  48. I hate this fucked up site after Barrons update. I cant post shit from my tablet.....anyway..I'm no expert in trading...but.. in my limited experience ;) buying stock at open is a hardest fucking possible thing You can Iimagine. Specially under current market structure on retail account.l try to make it short..you won't get any fills on winners. And losers will be all yours. Yeah..you may theorizes all day long and show your stats, calcs or whatever..but until you show or share your actual returns /experience its all worthless talk. remember this proverb..everyone is a genius in a bull market... Stories..theories..statistically speaking..
     
  49. I tend to agree with you.

    I think the OP hasn't a clue what he is talking about.

    He is listening to too many idiots :)
     
  50. Hi Bob111,

    I shared/proved my trading records years ago on TradeStation where I developed the automated version of this strategy. This is not a theory. Not to mention, I proved it 4 ways: mathematically, physically, geometrically and logically. You can not refute it. The bottom line is, if a stock ranges a minimum of $1.00 then it has to cut through the Buy Zone either through the top, the bottom or both. There is no way around it.

    But I am not trying to force anyone to believe me or trade like it do. The choice is yours: Take it or leave it. Either way, MAY ALL YOUR FILLS BE COMPLETE.
     
  51. Yes, of course it does, but you left out the most important bit :)
     
  52. Au Contraire, I would say he hates Mr surf..LOL
     
  53. @Quantfisher, is this what you are refering to?What`s the formula,generally?

    Is it MIN (High – Open, Open – Low) for the Lower band;
    And MAX(High – Open, Open –Low) for the Upper band? 5-75 ADR.png
     
  54. Exactly Bob, without actual stats it is all mumbo jumbo talk, just like most of what is said about trading.
     
  55. He will have a job explaining to you, as he does not know.

    Has he not stated that he is just repeating what some idiots told him.

    If he had any experience with trading, he would know that only the big accounts trade the open, and the small accounts, try to trade the open :)
     
  56. Actually, he thinks I am Mr surf :)

    He was banned a few weeks ago, as he made a not so nice post about Mr surf, and he also mentioned myself in it. I have a screenshot of it, as the mods deleted it :)
     
  57. If you`d ever want to trade the Open,you`d want to Sell below the Open and Buy above the Open,and NOT counter-clockwise as the Op suggests,statistically speaking...
     
  58. There`s no such thing as 5% or 75% - you`ll have to curve fit those bands constantly to trade that approach.
     
  59. I've no doubt that the OP knows exactly what he is doing, its just that without an exact description of his process most on here can't work out the details for themselves and then go on the attack. Two trades could be set at market open, one long and the other short with targets at a proportion (75% maybe) of the mean range of first 30 minutes and stops at a smaller proportion (10% maybe) on the opposite side. In principle there is no need to look at the chart once the trades are set, simply come back after 30 minutes and close any trade still open. Thats one approach but clearly there are variations and it probably doesn't match the OPs approach. The approach I just stated may or may not work as possibly both trades would be stopped out whereas it would be hoped that just one would be stopped out with the other hitting the target. As an alternative just place one trade at the open according to an analysis of market direction. The method doesn't seem viable for trading stocks as the initial spread can be large but that doesn't appear to be a problem with indices.

    Without specifying the details my personal approach for trading the first 30 minutes after the open for the DOW or DAX involves observing a 1min chart.
     
  60. You mean your personal approach just born, right?......lol...........ET is really the unique place on web.
     
  61. Good points.

    In relation to the OP..

    "a little bit of knowledge is a dangerous thing"

    :)
     
  62. after 7 pages..what instrument OP is talking about? stocks,futures,options? options on stocks? options on futures? bonds?CFD's?
     
  63. what you are talking about? stocks? options? futures?
    i explained earlier how this would work on stocks.
     
  64. I don't think he knows himself, as he stated he is just repeating some information he came across.

    Personally, I would say trading the open is best done with ES, NQ, SPY and IWM.

    Options are a no go, due to bid/ask spreads.

    Bonds, not sure, as I do not trade them and have no interest in them at all.
     
  65. same for stocks. as i said above-it won't work,if you try to spread orders across multiple stocks. SPY-IWM-maybe. but in order to make a meaningful amount of money out of couple securities you probably have to make hevvuva size bet.

    ---------Two trades could be set at market open, one long and the other short with targets at a proportion (75% maybe) of the mean range of first 30 minutes and stops at a smaller proportion (10% maybe) on the opposite side.--------

    ????? same here. i just don't get it what he was talking about
     
  66. In relation to what he meant.

    He is looking at the average move from O to H, and from O to L, and then setting the profit target at say 75% of these average ranges.

    Stops at 10%.

    The big problem here is your stop placement.

    You can get stopped out on both trades, and still see the averages be put in!

    Therefore, it really is not all about "where" you place your stop, but it is all about "when" you execute your trade.

    Time = Money :)
     
  67. I haven't daytraded in years but the only times I was interested in trading were near the open and the close. Thats when the big orders are generally executed.
     
  68. The open fade - most volume is traded at or near the open. Since market makers are the limit orders, naturally they are taking the other side of big orders. Once the dust settles you can expect that they will adjust their books so incoming market orders push the market IN THE OPPOSITE DIRECTION of the initial high volume move.

    Good signals to help time the open fade include 'extreme readings' in the TICK index and certain times such as 10:00 EST, 11:00 EST and 11:30 EST (European close).
     
  69. Also, try this exercise. See if you can hold winning trades on average twice as long as losing trades. Automation and any kind of analysis is a little next level for most of us, isn't it? ;)
     
  70. Why do I get a feeling that sOme People talk to themselves :)
     
  71. Try this:

    Flip a coin. If it's heads, enter a buy order. If it's tails, enter a sell order.

    Place a stop-loss equal to 1X, and profit target equal to 2X, the previous bar's range.

    After 5 minutes, if the trade is in the green hold for 5 more minutes and sell at the 10 minute mark, or at any time the profit target is hit. If it's in the red after 5 minutes, sell immediately or when the stop-loss is hit. If a trade that is green after 5 minutes reverses to the entry point, sell at break-even.

    It would be cool to see some verifiable third party results posted. :cool: Any takers?
     
  72. Good for you. -- Make your millions then doing that, and when That time comes...report back here :wtf: o_O to show-off and gloat about accomplishing the impossible,

    These kind of stories, or posts, are a dime-a-dozen on trading forums. Very little diamond, and a whole bunch of ore or rough.
    The only thing 'elite' about this place is the title.
     
  73. With all do respect, Lex, I disagree. The points he is making are valid. Trade when price is moving, and use time, to your advantage. READING PRICE IS ALL TOGETHER USELESS.

    I have made millions trading predominantly the first 90 minutes using a similar method to the random coin flip. Don't believe me? Post the results of the aforementioned experiment yourself. :thumbsup: I'm too old now and lack programming skills to keep up with today's kids. :D
     
  74. What is this? A quote from 1980? Market makers?
     
  75. Uhhh, you shouldn't be breathing, let alone trading if your brain is this handicapped.

    This thread is gold!
     
  76. No I don't believe you, as I have looked into the method you quoted and it is apparent that you are talking pure fantasy.

    With 175 days of DAX 1min data, using the rule you specified in the first 90 minutes, and with the additional proviso of an interval of 2 minutes between trades results in 1400 trades with steady losses.
    Gain.png
     
  77. Beauty of open is that HFTs do not like price discovery... There is a thread on opening orders only (OPG) that was created by Don Bright.

    https://www.elitetrader.com/et/threads/opening-onlys-2010.187382/
     
  78. What is it that you believe was left out?
     
  79. You will have to remind me!
     
  80. Trading after 10:00am ES, 3 contracts.. multi-year backtest.. using 'last' trades recorded.

    -SL 16 ticks per contract
    -TP 16 ticks per contract
    -exiting on the close each session
    -using volatility as a trigger
    -trend filter
     
  81. To sustain, costs in running.. 30K account. Drawdowns.. annual.. plus returns. Intraday margins are pretty low.. running 400 per..
     
  82. Without separating in-sample from out-of-sample, backtesting results are meaningless.
     
  83. Legendary Don Bright had a thread on OPG that lasted for years....

    ps HFTs hate price discovery...
     
  84. Toby something or other wrote a book on Opening Range Breakouts in the 1970's. Last time I checked it was selling for $500 and up...
     
  85. @motif

    just where did you learn that....!

    you really do not need to ask anyone
    to show any bank acct, brokerage acct or
    irs verified tax return....

    don't even have to ask anyone to

    SHOW ME THE MONEY....

    just show me your trading screen
    and where you entered and existed....


    I'll say, motif, you are one of the smartest
    cookies to date.... LOL

    Ahh Soo.... with all due respect, really.
     
  86. @TheRumpledOne

    alright, you said you have proven it 4 ways, maybe even 5 or 6 ways:

    but you and several others might have already forgotten the
    7th way and it is the only way.... in trading....;

    with all due respect to all
    claiming to be consistently profitable
    traders.... sim or otherwise.... LOL

    you really do not have to waste much of your time at all,
    you do not even have to .... SHOW ME THE MONEY....

    in trading: if you can, or if you care to,

    just show us your trading screen with
    the automated marked up of your entries
    and exits....


    that is all you really really need,
    in order for us.... to show you proper
    and due respect and homage as being consistently profitable....

    you or anyone else claiming to be consistently profitable,
    surely won't need your lawyers' approval, nor your acct
    permission now, do you.... to just show us eager beavers
    your live trading screen, but hopefully not your after
    the fact marked up pages with insertions and all....?

    with all due respect to every trader,
    trading live or sim ....
     

  87. For entertainment Purposes Only
     
  88. I tested the principle on DAX futures using only RTH data. It did not hold. Opening price was within high/low only 49% of the time. Any ideas why? Thanks in advance :)
     
  89. Yes..the DAX is not US stocks :)

    Mr Pesavanto's principle needs a little bit of fine tuning..but the overall approach is very valid!

    What is the first thing that comes into your head when you think of trading the open?
     
  90. You will never see a really consistent auto trading system..for if the big shots can't hack it..then rest assured the plebs will not :)

    I have an automatic system for trading the open..that tells me my stop level..and my profit target..for one long trade and one short trade.. however..the most important bit is left to the little grey sponge that has evolved over billions of years..most do not realize what they have between their ears..and some even think that what they have between their legs is more important :)
     
  91. Actually..2 trades works best..the R:R can be set at 1:4..gaps have a big impact on decision rules..full automation will never work..it is not possible..not even for those with $millions to spend on software development..but why should they care..after all..it is not "their" money :)
     
  92. Volatility and significant price movement?

    Yes I think your strategy will work more with stocks than futures. A stock price's open is generally the high/low of the day ~20% of the time. Not the case with futures though for some reason. It could be due to extended, overnight trading in futures unlike in stocks.
     
  93. Yes.. volatility is a 2 edged sword..but if you are in the right place..at the right time..then you can shift the odds dramatically!

    The problem of course..is..most want to be right..whereas being right has nothing to do with making money..but being wrong has everything to do with it..so..do not try to be right..and when you are wrong .make sure you do something about it :)

    Those who say to avoid the first 30 min of trading..well.. obviously do not know the best way to do it..or the best market to do it in!
     
  94. So what about the 0.50 and 0.20. 2.5:1. Apparently you finetuned it to get 4:1, along the years. Min. ADR still 0.50?

    Regards, GO
     
  95. This sounds like that garbage that The Rumpled One used to try and sell here called buy zone however it was backtested and found to be useless.
     
  96. by whom? link?
     
  97. i always suspicious of the two-line methods (even without guarantees): either author does not know (yet) what he is doing or looking for fools
     
  98. Anytime you hear guarantee in this business, run the other way. The OP can guarantee you a big fat shit with 100% certainty.
     
  99. Intraday price direction is strictly supply/demand. It will move roughly 70% of the avg daily range for the past 10 days in the first 30 minutes of trading. Quite simple. Agree that two trades per day creates plenty of opportunity to consistently make a profit.
     
  100. You forgot to add one complex variable. It’s called volatility. Not that simple, as it constantly grinds away at your win rate.
     
  101. This is typical ET. Quantfisher is attempting to be helpful. His premise and information is correct. Pesavento reference is absolutely statically and quickly verified. Just do some on your own to grasp what Quant is stating. It works. It tests out. Prove it by doing some work. Sorry Quantfisher for the ET bash away crowd. Most cannot recognize what is valuable and what is not.
     
  102. Only one problem: Good Posts. No PM availabilty? So how are you getting PM'd by so many?
     
  103. Learn to ignore Fordewind...
     
  104. Sorry but you have it partly right. This is so simple that it may be difficult to understand what Quant has stated. Suggest you obtain book he referenced. Larry Pesavento book: "Opening Price Principle"
     
  105. what have i partly right..and what is so simple?

    the OPP by LP is not the best way to trade the open..nor is his gartley pattern of any real value..or his antiquated fib card!!!

    remember why all these people "write" stuff..for the gullible public :)

    averages will do more for your bottom line than any other spin doctor's remedy..but..as with anything worthwhile..there is some time and dedication required..which..most are too lazy to commit to!!
     
  106. LOL HAHAHHAHAHAHA that is too funny.