I recently discovered something that I thought was worthy of opening up a new thread. Trading only in the mornings. I am a professional trader who trades multiple accounts and I recently starting trading a new account at the beginning of July. This new account initially started off well (up 6%) before I had a string of a couple of a few days that took the account down to minus 15%. It is important to note that the account started with only 30k, so it only takes $300 to move it a percentage point. Now draw-downs are nothing new to me and just part of the business. As a pro trader you have to learn to accept the fact that you are going to have losing days. If you let these losing days get to you and affect your emotions, you might as well find another job because you are not cut out to be a trader. You learn to take stops and accept the fact that small losses are part of the business. But, unfortunately, it doesn't take long before a few small losses add up to one big loss. I am a fairly decent morning trader. I have learned (and it has been a very expensive process ) to sit back in the morning and wait for at least 10am EST before making a trade. I'd say that 80-90% of the time I make a profit in the morning. I have also learned, as most pro traders have, to not trade during the doldrums......the time period between about 11:30am EST and 2:30pm EST. We all know what happens when we trade during that time. Maybe a few scalps are ok, but overall it just ends up in getting stopped out or making your broker rich off of commissions as there is no volume. In fact, I usually make it a habit to close my positions when doldrums start and get away from my computer. Then I usually return around 2:30pmest and am fresh and ready for the last hour or so. I make it a habit of analyzing my trades every week (I learned this technique from Tony Oz). I take a look at each and every trade and make a note of what I liked and didn't like about each one and what I could have done differently. So after analyzing this particularly crappy week, I found a very interesting pattern.....that my morning trades have been profitable, but I gave all my gains back and then some in the afternoon. Now there were some other factors also, like too large of positions and too wide of stops, but for the most part, I had profits that I pissed away in the afternoon. After realizing this, I decided to try something new......trading only in the mornings. Since I usually am profitable in the mornings, I figured that this new technique should boost my returns. Well, that was 14 trading days ago and I am pleased to report that the account has had a 180 degree turn around. Out of those 14 trading days 12 of them have been profitable and the account is now up 44% for the month, a swing of almost 60% from its lowest point. Yes, there have been some afternoons where I have "missed out" on a few opportunities, but for the most part, the afternoons have been choppy and indecisive as bulls and bears duke it out. Has anyone else noticed the same or had a similar experience?
Im not sure why the mroning has been so hot of late. My experience has been the same, although i dont wait till 10 am to initiate trades. Ive usually got 2-4 positions open by 6:45 am and they are usually closed out by the begginning of the doldrums. I find it difficult to even want to trade after the doldrums when the mornings have been so profitalbe. However, of late, it looks as though some of those 3pm - 4pm reversals have been worhty. Nice work turnin that account around! -Flyin it High
My trades have a gaussian quality to them as to the frequency of when they happen. Although they are more profitable in the mornings and the afternoon, that is only so because there are more of them there. I am "afraid" to leave my computer for lunch, as usually that ends up costing me several hundred dollars in opportunity costs on a trade or two. A very expensive lunch... nitro
I like the pre market and the post market. Bit of a roller coaster but lots of fun. I have a friend who only trades the doldrums, he uses oscillation on ten cent moves. When I was at Broadway they told us first year traders should not trade the first 30 minutes. Experienced traders love that time, but first year guys can end up starting the day with their ass in a sling.
I've found just the opposite......Since forcing myself to NOT trade the first hour, I have found that I'm not tempted to jump into trades. By allowing the macro- and micro- patterns to develop and set-up first, I've run a consistent string of winning days. In reviewing my daily journals I discovered that its on the days I begin from the hole and have to play catch-up are my worst perfoming days on which I've experienced my greatest drawdowns. Not to mention, that living out west, I love getting the extra hour of sleep and getting paid for it.
i think there are 2 reasons that trading in the mornings only works better for some traders, myself included.. first, the morning has better volume and moves tend to have more follow through.. the second reason has to do with the mental state that is created by a series of wins.. when a trader is winning it can create a euphoric state of mind where the possibility of loss is blocked.. so a trader wakes up in the morning.. makes a few winning trades and then has this "cant lose" feeling going into the time of day when there are fewer and generally lower r/r opportunities.. this state of mind tempts him to take trades that he shouldn't take resulting in a loss of profits or more for the day.. -qwik
I have found that 72.6% of my profits and 13.7% of my losses come from the mornings. Conversely, 27.4% of my profits and 86.3% of my losses come from the rest of the day. One might suggest for me to give up afternoon trading, but I can't. Trading is like a drug for me. I need the fast pace. Call me crazy, but don't call me lazy.
Ok, you're crazy. By the way I heard that 53.985478 % of profits come in the morning and 41.387602% come in the afternoon and 4.626920% come between 9 PM and 4:59AM eastern which could be consdered morning by some and evening by others. Source: A guy named Louie I met at a Taco Bell.