This morning’s situation is a pretty good example of why I almost always choose to refrain from making any swing trades during the opening thirty minutes of each trading session. The mainstream news media, not just the business networks, were closely following the futures last evening amidst the lack of a debt ceiling deal in Washington, building as much fear as they could. When the futures opened much lower, the bears had their prized evidence.
When the opening bell rang this morning, we still had a sizable gap down in progress. Rather than panic-selling at the opening lows this morning, sitting out the open would have seen the bulls make a decent comeback. An important thing to remember as a swing trader is that liquidity is low and price swings are particularly high during the opening thirty minutes of trading, as traders feel each other out. This time period is often referred to as the “Wild West,” because gunslingers looking for quick scalps are the main players, in addition to our high frequency friends, of course. Thus, I usually find it constructive to wait out the open and allow the session to take hold. Developing this habit allows you to refine your patience and detach emotion.
In fact, this technique alone has helped 12631 Trading Room members significantly.
Very nice post Chess – holds true for me as well – the trades I put on last week with the help of 12631 were all down but still profitable this morning. Instead of taking small profits, I waited and now they are recovering nicely. This was in no small part to the calm, composed focus of the 12631 members in the chatroom. Twitter is so much panicked noise as everyone tries to be heard above the clamor.
THanks.
Great post Chess! Control your emotions and ignore the noise..also great advice from you
personal note:
once in a while, i’ll trade the open to dump out of a position on a gap up, other than that not so much.
of course we’ve all traded the open at some point, like we’ve all jerked off. but personally, i feel as though trading the open puts me in a rushed frame of mind. very un-chess like.
that is all.