Trading during specific time periods is not a new concept, at least not to the people that make up most of the US markets. It is important to note this concept because the fact remains true, day-to-day, no matter what, people eat, says Tom Busby at DTITrader.com.
Ever wonder why you might have put on a trade in mid morning, left your office, and come back to a trade whose winnings were only temporary? You likely need to check your times. No matter who you are, in almost every case, you will inevitably go to lunch. If you are a trader and you aren’t going to lunch, it may serve you better. The individuals I spoke of are the major market movers, tossing around billions of dollars all morning long, from 8:30 CT until about 10:30 CT. Once the middle of the day hits, just like the rest of humanity, its time to eat and gather energy for the afternoon session. Most traders come back to their posts around 12:30 CT. During lunch, or what I like to call, ‘chop time’ in the market, retail players are squeezing each others accounts, typically pushing the market in every direction but a trending one. This is a frustrating peculiarity. Once the 12:30 to 1:00 time zone hits, the market is generally back off to the races again. The trick is, knowing how to read the numbers given during the lunch session. This is not to say that every lunch session trades this way, but most do.
If you want to get into a trade with higher odds of working out profitably, it is best to look for an entry after the open (keeping economic announcements in mind) and before your stomach starts growling. Once you have reviewed the morning’s session and gathered your parameters for the afternoon, you can look for a trend to accelerate or reverse into the afternoon session. This should help you exit an already profitable trade or place a new trade before the next trend develops. This concept is important to note and I hope it will help you become a more attentive trader.
By Tom Busby at DTITrader.com
