Morning Breakout or Fade??

Discussion in 'Trading' started by jones247, Dec 7, 2009.

  1. It appears that the market goes through cycles of breakouts and reversals with the 10:00 am est direction. As of late, after the first 30 minutes of trading (9:30 - 10:00 am est) the market tends to reverse direction. However, there are times when it seems that the market will continue in the direction of the first 30 minutes, even when a minor pullback occurs.

    Is there a way to backtest over the last 3 -5 years to determine the % of morning breakout to % of morning reversals at the 10:00 am est hour? I would venture to guess that the result are probably 45% - 55% either way...

    Although past performance is no guarantee of future outcome, that is a key component of determining probability or expectancy. If the success rate for either breakouts or reversals off the first 30 minutes is somewhere around 45%, then it demonstrates that the key is not a particular methodology in as much as it is risk management (favorable r:r ratio & risking less than 3% of capital per trade), trade management (larger sizes when system is working & smaller sizes when it's not working) and consistency (sticking with a given system vs. buzzing from one method to another without extensive due dilligence).

    Nonetheless, which do you find more successful... Breakouts or Revsersals after the first 30 minutes from the market opening???

  2. 1) ?.....there's a ~50% chance of earning or losing a dollar, therefore the need for risk management.
    2) Be sure there aren't any reports being released at 9am CST.
    3) Be wary of prior daily, weekly and monthly extremes during the first 30 minutes of the session.
    4) I prefer reversals/fades.
    5) I give "significance" to what happens around lunch time.
    6) Don't get bogged down in compiling old data and calculating arbitrary statistics and probabilities. :cool:
  3. thanks for your reply, Nazz...

    Are you a full-time trader?