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SO YOU WANT TO TRADE ONLINE
TRADERS GETTING ORGANIZED
TRADERS LESSON ORDER TYPES
TRADERS LESSON ORDER ENTRY
TRADERS LESSON STOP ORDERS
TRADERS LESSON SELLING SHORT
UPGRADES AND DOWNGRADES
MARKET INSIGHTS
TRADERS LINKS 1
TRADERS LINKS 2
TRADERS LESSON TRENDLINES
TRADERS LESSON CHARTS and TA
TRADERS WORKSHEET
When To BUY and SELL
TRADING LESSON THE OPEN
TRADING STRATEGY EARNINGS
STOCK and MARKET NEWS
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| Trading lesson "The Open" |
| Patience and knowledge of support and resistance levels are key. |
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| Probably one of the most important things a trader needs to control is emotion. You probably have seen many, many times where the market has sold off at the open only to rebound and recover it's losses and even surge ahead. Key things to remember: When there is bad news regarding a stock or the market, generally it's that first surge (to the plus or minus side) that becomes an overeaction. This overeaction is caused by fear or greed of mostly the small and individual investor. This first hour of trading is generally called the amateur hour by the pros. For Nasdaq pre-market and after market futures activity Nasdaq Pre-market / After-market When the market opens and a stock surges on good news: If the specialist on the trading floor is holding any short positions he/she will try to pull the stock back in , so he can cover his short positons before letting the stock price take off from the flurry of buyers. This usually happens around 9:40 - 10:00 buyers then again step in around 10:00 with a subsequent pullback occuring at about 10:30 This flurry at the open is a terrible time for any trader to place a market order to buy, what will generally happen is you end up buying at or near the high of the day. I always recommend using limit orders to set your entry and exit points. If your patient and wait till 9:45 9:55 or at 10:20 10:30, you will most likely get a better entry point. It is best to have access to an intraday stock chart and analyze these movements so you better understand the character of the trading day. When the market opens and a stock drops on bad news. the same scenario occurs as above with some subtle changes. Yes the amateur investor will overeact and sell at whatever price to get out but then, if the stock drops dramatically some brave amateur buyers will step in and buy thinking the stock is now cheap. Careful. If you are one of these buyers make sure as soon as your order gets executed, immediately place a sell stop order to protect yourself in the event the buyers dry up and the stock continues it's downtrend. Knowing key support levels are crucial, like the 50 day and 200 day moving average, as well as support and resistance price levels of your particular stock. Other key times: Around 12:30 and 2:00 are two key times I look for the pros and institutinal buying and selling to step in. The pros generally control the market at the end of the day. Another opportune time is around 3:20 - 3:30 or so. This is when a lot of shorts who day trade will buy to cover their short positions to lock in profits or to exit because the stock price is going against them, causing a price surge (short squeeze). This reaction also brings in more buyers making the stock surge dramatically recovering any loss that may have occured during the day or even a gain. Again I advise you to study an intraday chart of the market and stock you follow to get a feel for the character of the move. |
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