A few weeks back, I kicked off the Intelligent Investor Series as part of my weekly commentaries. Th...
How to Master the First 90 Minutes
04/17/2012 3:25 pm EST
The first 90 minutes is the "sweet spot" for the markets, says Greg Capra, who explains his proven, price-driven strategy for identifying and executing high-probability trades.
I’m here with Greg Capra, and you have a strategy to trade during the first 90 minutes and earn a living doing it. Can you explain that?
Sure. You know, the first 90 minutes is really the sweet spot in the market where everybody comes to the market untainted for what has happened during the day; unbiased, they just come in with their strategies.
What we do is we look for those stocks that are moving in the morning. We have a pre-market gap list and then we look at the daily patterns.
Most of the time, we like to see somebody that got caught on the wrong side of a move. For example, maybe a stock has gone down several days in a row and prices are gapping up above the high of that bar. The shorts are caught there, and they are going to buy to cover.
So there is a bit of psychology, so to speak, as to what has gone on in the pattern.
Then we look at the intraday set-ups—how that particular bar formed—and then we look for set-ups in a smaller time frame to pull back to support.
Basically, we are combining a bias from a higher time frame with the structure of the intraday time frame and then looking for the set-ups that we trade.
So your system helps investors and traders use those price points and is only price driven; there are no other indicators?
Actually, that is kind of a pet peeve of mine. When I first started doing this in the late 80s, I went through pretty much what everybody goes through and trying to find the “Holy Grail.”
I researched every indicator at the time; I wrote my own; I went so far as to study planetary alignments and cycles and Fibonacci extensions, and so on.
After getting to the point of realizing that this just doesn’t work, whatever the books say, whatever the people say out there in promoting it, there is just no solid ground to say that this is consistent or it really works.
See related: There Is No “Holy Grail” Indicator
It’s not about predicting; it is about recognizing what is happening in the moment and placing your trade with money management.
So after spending that time and then coming full circle, it is just the basic foundational stuff, the support/resistance that is based on supply and demand.
It is about you and I being involved in the markets and looking at pictures called candlesticks that display what we are thinking.
And so these indicators are really not worth following; it is really price action?
I truly believe the use of indicators and the teaching of it is one of the main reasons why so many can’t do this.
They are looking at reality through a fog, so to speak. Price action is reality. If I try to predict what is with an indicator, I am looking over here instead of over here.
The reality is right in front of my eyes, so why do I want to cloud it with an indicator?
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