Why The Early Bird Doesn’t Always Get the Worm
The first 1/2 hour of trading is a tricky and risky thing. To me its a losers game. Many respected traders hold to the 1/2 hour rule and some traders say just the first 10 mins. I say I why mess with it? I don’t trade the first half hour due to choppy trading and lack of direction in the market. (especially in this volatile market).
How can you really know if the stock is strong enough to move in either direction?
Here are some examples:
Stocks breaking new highs or fading off lows. Every stock is high of the day and low of the day. Its hard to have an edge because its hard to know which way they will trend.Our job as traders is not to call the market but to interpret setups that have an edge.
The market usually takes about 30-60 mins to establish a trend for the day. Be patient and learn to only trade the best set ups. Trading is a war. Trading can beat you down. So it’s important to put yourself in the best position possible to be profitable.
A trade that make look good in the first few minutes can easily turn on you due to volatility. Have to beware of early reversals. The market is always right and it can suck you in if you are not careful.
So to sum up let the market settle down, apply your rules, and then make a sound trade decision. And if you don’t apply this knowledge then set reasonably tight stops and enjoy losing your money.
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