Many people have set times of the day when they trade.
For most it’s the open or close and many don’t like trading during the day.
For the most part that makes sense.
The open is when most of the larger traders (mutual funds, hedge funds etc) do their trading and as a result it’s usually when there’s the most volume.
This is often a good thing because you can get the most bang for your buck. ie. bigger moves.
However this might not always be best for everyone.
I like to consider the type of trader you are before blindly trading certain times of the day.
When I look at different trading personalities, they are usually broken down into those traders who like big breakout moves and those who like reversals or mean reverting types of trades.
If you’re looking for the bigger breakout moves then you should really be looking to trade the most on the open.
You will often get big moves happening right from the opening bell.
However if you like to look for reversals and things such as false breaks, you should be trading during the day as it might be more suitable to the types of trade you’re looking to take.
As I mentioned earlier, the big traders like to execute early.
If there’s no big traders around, when price breaks out of its range or breaks out of certain levels, it’s the big traders continuing to buy or sell that helps the move continue and follow thorough.
If the big guys aren’t there to begin with, it makes a large move a lot less likely.
Of course if the move is backed by something fundamental then of course it will likely follow through.
However it’s just a simple stop run – then be prepared for it to find it’s way back into the previous range.
So next time you start trading the open and you’re getting ready to take an early lunch – consider hanging around…
You might just find some good opportunities.