Total Volume - should we trade on the first and last hours?
TVOL
Since many people are on self-isolation, and the day off in this case becomes even boring than before, I suggest to relax and think about this: is it worth trading in the first and last hour of trading?
It's strange that many people advise not to trade these hours, but not everyone can explain it.
Usually, beginners, who have a poor knowledge, trade everything in a row, and enter the market immediately, in the first minutes.
Some even place advanced orders, hoping to grab luck by the tail. To be fair, I should also note that experienced traders have strategies based on the first hour trading.
And here's the thing.
If you look at the chart, you will see the total trade volumes on the NYSE.
You can clearly see how in the first and last 30 minutes of trading volumes rise sharply, and then the volatility falls.
Experienced traders use this increased volatility in breakout models or in models with fast strong false breakouts, when the price rises sharply, breaking through the level, and then falls just as sharply.
That's how I would characterize morning 30-minutes intervals:
1. The first 30 minutes after the opening of the session give the largest volume, but at the same time there can be the most dangerous and profitable deals, so they are not for beginners.
2. The second 30 minutes. Time of reversal zone - the volume is quite high, but not the same as in the first 30 minutes. Right now, trading is optimal for experienced ones - the volatility of deals is still high, but some stability and calmness have already returned.
3. Next 30 minutes. The volatility is compressed, and you can trade with low risk. It is a favorite time of many large traders when they set the market tone and move it in the direction they like.
4. Next 30 minutes.The market calms down, the high volatility of the day is usually over, many traders close their profitable positions at this time. It is the best time to prepare for new trades.
5. Next 30 minutes. A large and safe area for morning trading. But u should be careful towards the end of the period, as lunchtime may start a little earlier or later.
As for the last 30-40 minutes of trading in the afternoon session: many large investors are adjusting their portfolios at this time.
I don't recommend working under such pressure, although the volatility on short-term trades can be quite favorable.
Naturally, it is necessary to be aware that trading the 1st and the last hours involves increased risks:
1. And here's what the easiest thing can happen: what if you placed an order and the price opened with a gap in the opposite direction? You didn't guess with the direction? - It happens. At best, you won't get an entry point.
2. But let's imagine the following: you entered the position, but the price immediately went against you, SL should have worked, but the deal was not closed. I'm sure everyone has had it. There is no need even to explain why it may happen. And if you are sitting in a position with big shoulders - hello Margin call.
But what to do if the system is based on strong, fast, false breakouts? The answer is simple: if you understand the accumulation of a position by a large player, you can easily find the same prerequisites for this, but this case you will trade in conditions of low volatility with minimal risk.
You'll certainly have to do a lot of hard work and gain the skill to understand the chart. But agree that it is worth it when it comes to reducing risk and your money.
I'm gonna be honest, I traded first hours a while back. There were TPs, but I got more SLs. Last year I corrected my trading system, corrected the allowed risks and of course I excluded trading in the first and last hour. The results became much better.
Anyway, trade only what you see on the chart, trade from the permitted risk, trade exclusively on the system.
Take care and press like if you're learning something new for yourself now)!
Since many people are on self-isolation, and the day off in this case becomes even boring than before, I suggest to relax and think about this: is it worth trading in the first and last hour of trading?
It's strange that many people advise not to trade these hours, but not everyone can explain it.
Usually, beginners, who have a poor knowledge, trade everything in a row, and enter the market immediately, in the first minutes.
Some even place advanced orders, hoping to grab luck by the tail. To be fair, I should also note that experienced traders have strategies based on the first hour trading.
And here's the thing.
If you look at the chart, you will see the total trade volumes on the NYSE.
You can clearly see how in the first and last 30 minutes of trading volumes rise sharply, and then the volatility falls.
Experienced traders use this increased volatility in breakout models or in models with fast strong false breakouts, when the price rises sharply, breaking through the level, and then falls just as sharply.
That's how I would characterize morning 30-minutes intervals:
1. The first 30 minutes after the opening of the session give the largest volume, but at the same time there can be the most dangerous and profitable deals, so they are not for beginners.
2. The second 30 minutes. Time of reversal zone - the volume is quite high, but not the same as in the first 30 minutes. Right now, trading is optimal for experienced ones - the volatility of deals is still high, but some stability and calmness have already returned.
3. Next 30 minutes. The volatility is compressed, and you can trade with low risk. It is a favorite time of many large traders when they set the market tone and move it in the direction they like.
4. Next 30 minutes.The market calms down, the high volatility of the day is usually over, many traders close their profitable positions at this time. It is the best time to prepare for new trades.
5. Next 30 minutes. A large and safe area for morning trading. But u should be careful towards the end of the period, as lunchtime may start a little earlier or later.
As for the last 30-40 minutes of trading in the afternoon session: many large investors are adjusting their portfolios at this time.
I don't recommend working under such pressure, although the volatility on short-term trades can be quite favorable.
Naturally, it is necessary to be aware that trading the 1st and the last hours involves increased risks:
1. And here's what the easiest thing can happen: what if you placed an order and the price opened with a gap in the opposite direction? You didn't guess with the direction? - It happens. At best, you won't get an entry point.
2. But let's imagine the following: you entered the position, but the price immediately went against you, SL should have worked, but the deal was not closed. I'm sure everyone has had it. There is no need even to explain why it may happen. And if you are sitting in a position with big shoulders - hello Margin call.
But what to do if the system is based on strong, fast, false breakouts? The answer is simple: if you understand the accumulation of a position by a large player, you can easily find the same prerequisites for this, but this case you will trade in conditions of low volatility with minimal risk.
You'll certainly have to do a lot of hard work and gain the skill to understand the chart. But agree that it is worth it when it comes to reducing risk and your money.
I'm gonna be honest, I traded first hours a while back. There were TPs, but I got more SLs. Last year I corrected my trading system, corrected the allowed risks and of course I excluded trading in the first and last hour. The results became much better.
Anyway, trade only what you see on the chart, trade from the permitted risk, trade exclusively on the system.
Take care and press like if you're learning something new for yourself now)!