I'm usually done with my workday well before lunch. I get to make my kids breakfast and pick them up from school. I routinely have lunch with my wife. My family has the freedom to spend quality time and take amazing vacations together. My stress is low and health is great (imagine that for a trader!). I live on the East Coast (near Philadelphia), but I have students who trade the morning on the West Coast and hold onto full-time jobs.
Those are all by-products of my "Trade the Morning" strategy, but they aren't the reason why I do the bulk of my trading in the first two hours of the day. I trade predominantly from 9:30-11:30 a.m. EDT because I believe it yields the best results.
Many traders have complained about the lack of volume and "clean moves" in the market over the last few years and how it has adversely affected their performance. They complain about the whippy action of stocks, all while they sit at their trading desks at 1:30 p.m. on a Friday in the summer.
Just as important as it is to know, how
,to trade and, what
,to trade, it is paramount to know, when
, to trade.
The first two hours of the session is where the volume and volatility are. In addition, I believe, most importantly, that the first two hours are where you are most likely to find humans trading. Our markets have become increasingly electronic over the last few years, and there has been much recently made about HFT, but despite using a short-term trading strategy, my consistency over the last few years has continued. I am able to keep the money I make during the prime trading hours because I don't let my P&L twist in the wind during periods of the trading day when I believe the machines exert the most control.
Intraday trading is a lost art-form, all because most traders forget why day trading became popular in the first place -- the ability to consistently minimize risk. I am able to sleep well every night and enter every day with a clean slate because I don't subject myself to overnight risk. I am a pure technician, and I am in control at all times.
In our "Trade the Morning" Strategy Course and Mentoring Room, Mike Lee and I teach a handful of core short-term trading strategies that allow you to repeatedly build trade scenarios with favorable risk-reward scenarios. Long-term success as a short-term trader is about skewing risk-reward in your favor as many times as possible.
Editor's note: This story by Steve Levay originally appeared on T3Live.com
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