There are thousands of ticker symbols in the stock universe, a handful of which I keep a close eye on. But the NASDAQ, I watch every single characteristic of this market. To me and the stocks I follow, it is the major tell. Most importantly, after 300 days of watching every single open, intraday, and close on in the front month future of the NASDAQ, I am realizing 80% of the daily action takes place within minutes of the market opening.
Thus with the right strategy, one should be able to earn as much if not more from the open as they can spending the entire day stalking the futures. Moreover, one should be able to deduce the daily direction and whether to add, reduce, or press your favorite stock picks.
Today I only had time to actively watch the first hour and a half of trade. The opening drive was unexpected and never printed an opening swing low. This is a peculiar type of open and the outcome can be crippling for the leveraged trader. Fading this type of open is stepping in front of a firehouse of buy orders. Yet that was exactly the right move today.
The rest of the day was flat on the index. The hawks and Pelicans managed to find intraday momentum in individual stocks because they are masters, but I want to be as proficient a futures trader as the world has ever seen. The outcome of any economic decision should be measured both on profit and time.
Time is not the friend of the leveraged trader.
1.5 hours of live trading. The 20% of the day that produces 80% of the intraday opportunity. If I can trade even less, perhaps 1 hour, then I will. Then given the information reveled by the morning auction I can choose the best suited algorithm for the hypothesized afternoon order flow conditions.
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Raul – So do you start trading after you see your “tell”? Ie, after the first hour? Or is the “tell” apparent after the first few minutes of the opening bell? I’ve looked at some of your opening charts and it appears to me that the opening swing is sometimes 30-60 min after the open. And are you trading just futures? Or stocks as well? Are there market conditions that steer you to just trade stocks or just futures?
The opening swing has to happen early on. It is the movement of price based on Market On Open orders. They execute relatively quickly, about 2-15 minutes from my studies.
Once the opening swing is recognized there are two trades I am currently seeing. If energy builds up inside the opening swing, sloshing inside it before exploding out of it, join the order flow. The second and more scalping-like trade is to fade the first move out of opening balance, especially if it happens very soon after the balance is formed and extra merit to the trade if it is against a piece of context from the morning report (VAL, LVN, etc)
This is a trade using futures, yes.
I swing trade stocks, 2-12 days typically but sometimes as long as a quarter or 2.
I like big ranges like we are seeing now to get enticed into futures.
Slow grinder markets are great for stocks and especially options.
I do investment themes too, like LED lighting.
Thanks for your insight.
Sounds like one needs to be fairly quick in identifying the direction and then executing your plan. What do you look for to know when you should stop trading for the day?