After market synch between cash and indexes, you get the lowest market risk trade of the day because of the market pace. The inverse relationship of market pace and management risk is the basis of my comment. The inverse relationship is proven and the most pragmatic issue that the least knowledgeable, skilled and experienced traders face (personal not market induced risk). This is the risk of being in the market and not getting out when they do not know what is going on. The issues of trading the open, intelligently, then center on when the market risk increases from almost nothing to anything relatively significant. Since this part of the day involves the least market equilibrium, any temporary point where equilibrium has been reached is the place and time of the opening trade exit. It is most easily observed on the DOM or button by observing the five level equal totals of the real and fake values. The same-siders and opposite-siders are showing and at this time the front runner unshown strategies keep the fast changing upper two levels of the DOM in balance as well. The details of the synching process, using market indications and signals of which way the fast paced market initial move will go, how to annotate the market movement scope and bounds, and using abundant specific leading indicators of price to monitor are sometimes not done by traders. Since they don't do what is required, they cannot capitalize on the lowest period of risk in any market day. Thus, the real risk for traders is mostly a function of personal laxity in getting their personal role done in trading. A beginner can count on making about 1/3 of the daily H-L that will eventually unfold during the day. This value is well in excess of the average of 1 point a day per contract on the ES. You can immediatley see that screwing up by being lax is how most beginners get to lose their stake quite rapidly. The bottom line is that it is the best place to make low market risk money and usually people who cannot help others properly suggest that they stay out of the market and wait until there is higher market risk to trade when the market pace is lower and cutting the same amount of loss just takes a little longer. The "swinging in the wind" concept of being a slower loser. This topic is a good one for getting acquainted with the two shared roles of the market and the trader.
i love the open... i do 80% of my trading by 8:31 am cst.... we should close for lunch and open again...
There can be some very predictable trades in the first hour eg a index futures market that opens 15 minutes ahead of the cash, a market opening at a pivot, others. It can also be completely the wrong time or market to do some trades e.g buying the breakout of the first 5 minute bar in a market that will reverse 10 minutes later when the cash opens etc. Buying stocks that are being gapped up to be sold and vice versa. Think what somebody who knew what was on the cash order pad would do e.g in the futures, or what somebody who was looking to make money stuffing the public would do. I worked out that I made more over the long haul from waiting for a pullback than I lost from the stock that I missed that just kept on going up from the open and that I missed by waiting. The open is more for selling into than buying (at least in the markest I trade)
The first hour is the best time to trade. That is where the Volume and Volatility are. Day traders want and need those 2 things to take larger moves for more profit. The middle of the day is bland and generally there is not enough movement to take the larger moves (at least with my method).
So, its up a little in April. Nice chart. I am sorry to hear that amateurs are avoiding the first hour. I think it is about the only time they are able to trade. where do you think they should trade? Just pm BO's. Could you post your chart for that?? I am dying to see how you characterise S and R too. Meaning after the testing is over and being range bound continues.
I avoid the first 15 minutes, I believe many books tell you to avoid the first 15 minutes, not the first hour, first 15 minutes are usually kept back by reversals into 10 Never heard of a book telling you to avoid the whole hour 9:30 - 10:30 thats quite long to avoid
If this were true, wouldn't the person on the other side of your trade be more skilled on average in the morning, thereby making it harder to trade not easier? M