ADX

Convergence/Divergence

Cross Market Analysis

Day’s Profile

Day Trading

MACD

Market Depth

Market Open

Market Profile Analysis

Market Profile Charts

Market Profile Data

Market Profile Display

Market Profile Terms

Support/Resistance

Time Price Opportunity (TPO)

Time and Sales

Trading Education

Market Open

The opening and closing prices of the time period that we choose to trade are always worthy of our attention and careful analysis.  Typically, the open and close of each trading day are the focus of many traders, since this represents the outcome of a full day of trading activity.

In the morning when the markets open, we see a high level of volatility during the first half hour of trading. There is a flurry of activity that seems to take place during the first part of the morning. Many traders describe this period as the “Amateur Hour”.  Many novice traders tend to make costly mistakes during this opening frenzy.  Professionals on the other hand carefully study this important period of the day, as it will influence many of the trading decisions that they will make during the day.

There are a variety of reasons that contribute to the high volatility that is found during the opening hour. This is the time of the day when:

• Markets are adjusting to trading that has occurred in other parts of the globe while our markets were closed. We live in a global market and many markets are open and active when we go to sleep.
• At the open the markets react to overnight news and global events.  There are many political hot spots around the world and there is always a possibility of an occurrence that could disturb the market.
• Traders respond to earnings, company or industry news that may have occurred after the previous day’s market close.
• Various US government economic reports are often released prior to market open.  These economic reports have varying impacts on the market.  It is important to study the economic calendar, learn about the various economic reports and how they affect the market.
• From a technical standpoint, there are many queued up market orders that are filled at the open, individual investors place many of these market orders after the close of the prior session.

Professional and strategic traders learn how to assess this important market open activity to determine their intraday trading strategies.  Every profitable trader must understand how to interpret the price movement that occurs during the open. We encourage you to attend our strategic trader program and learn how to interpret and analyze the market open.