Our structure for the Trading Day
We have found that it is crucial to have a framework that separates the trading day into separate time frames. There are many ways to do this, but this is what works for us:
8:30-9:30 Premarket session. We often trade actively, entering and exiting positions during this time period.
9:30-9:50 The Open. Retail order flow from overnight gets filled. If there is a significant gap up or gap down in
the futures, we often fade this interval. If the market opens flat, we are likely to stay flat and
watch the market trade for a while.
9:50-10:15 Reversal Period 1. By the time this period hits, we want to be out of overnight plays or any opening fades.
The market typical reverses against the position you are in. We begin assessing the market by sector
(relative strength and weakness) during this period.
10:15-11:30 Morning Trading Session. This is one of the primary sessions where we tend to make good intraday
trades. This time of day is one of the most active, along with afternoon session 2.
11:30-1:30 Mid-Day Doldrums. We try to avoid trading during this interval unless there is a compelling reason,
such as a strong trend day underway.
1:30-2:30 Afternoon Session 1. Often light volume, sometimes not very tradeable. During the last 15 minutes
we often begin scanning the market for setups.
2:30-3:30 Afternoon Session 2. This is often a strong trading period to scalp. Watch for possible reversals at
2:30, 3:00, and/or 3:30.
3:30-4:00 The Closing period. This can either be a great period to ride positions into the close, or a difficult
period to trade, fraught with potential reversals and whipsaws. We call this period by watching
the Futures. Near the end of this period we are looking to enter overnight trades which exhibit
strong setups. Sometimes this intervals big orders (imbalances) that couldn't/didn't get completed earlier in
the day get "filled sloppy", resulting in big moves which we can take advantage of... particular
in Bull or Bear market trends.
4:00-5:00 The Postmarket. During this interval we are scanning for all stocks that move over 1/2 point, and we
are monitoring news feeds for developments on earnings, marking our accounts to market for
the day, updating our trading journals, and beginning our evening scans of the daily charts.
5:00-10:00 Evening research. During this period we study the markets, post our trading summaries to SI,
and prepare the Intraday STALK SHEET for the following trading day.
Deron |
