Time to Trade?

I get asked the question fairly often about what time of the day I trade. I think this is a good question, but I hate to see that all other traders use my answer as a blanket approach to determine when they trade, and not really understand the reason why. I want to cover this really quick, and then I will change the topic. I know I have answered this for the majority of folks that read, but this will give me the opportunity to have a link to forward to others when I am asked the question.

A couple of things...

First, dismiss what you have heard about "Amateur Hour." Are you an amateur? Will you be embarrassed if you trade during the first hour of the day? I do it all the time! Most of the money is made in the first hour, and on some trades this could be an opportunity risk if you miss it.

Next, if you place trades based on a particular entry rule or signal, trade whenever you get your signal! What difference does the time make? If I get my signal in the morning, afternoon, dawn, dusk, middle of the night, whatever. Trade your signal!

Finally, if you don't use an actual signal, then the time of day should only relevant to your level of risk tolerance. If you want to run out and anticipate something beforehand, great! As long as you are comfortable with the risk associated with it.

Here are my rules, and you can do what you want with them (except blindly use them). Most of you know I use two different technical approaches to time my entry points.

Support/Resistance entries

Breakouts

For my support/resistance entries, the time of the day is irrelevant. Time does not confirm anything on these trades. I don't wait for price confirmation nor volume confirmation. As soon as the stock is at the level in which I am comfortable taking a trade, I take it.

Breakouts are the only exception. Think about what a breakout is. It is when price exceeds a certain support/resistance level along with heavy volume. Time is very important in this scenario, because you cannot determine if price will remain beyond these levels until the days end. Nor will you be able to determine if enough volume will be present. This is why I wait until the end of the day to trade breakouts. I want to make sure that the price will remain beyond these levels and enough volume has been accumulated.

Then there is the topic of exits.

All my exits are pretty much based on support/resistance. Because of this, I also wait until the end of the day to see if the price remains beyond my line in the sand. If the price is beyond my line in the sand early in the day, I wait until the close to see if it holds or not.

Recommendation: Let's change the subject

Long: Stocks that go up

Short: Stocks that go down

Shoot me now for jumping out of ISIL yesterday.... I had ridden this thing all the way down....and then back up. Who would have thought that it would make that jump today. My Call Option expires Friday and so I got out early afraid of another move down the day before expiration...

Chuck from Orlando

Thanks for the regurgitation, Jeff. Definitely helpful to me. Hope it wasn't too painful.

Hans

Hans,

Not painful whatsoever! I get to use this link now to forward to others that ask the question. You've just saved me tons of time in the future my friend!

Chuck,

You bailed on ISIL?!?!

After the talk we had! Why does you option expire on Friday by the way? This wasn't a short term play, why the short term option?

GOOG, making a higher low than yesterday. Was yesterdays low the low pint of the flag ? I guess we'll have to keep an eye on it.

Jeff, good post on the PAY trade from yesterday ( I was not in it). It coincided with me starting the book, "Way of the Turtle" by Curtis M. Faith. Your explanation really addressed some of the bias traders must overcome to be successful...I could post the section if anyone is interested. Did anyone else enjoy this book ?

Jamie

taking a trade right now...12:47 EST..

Jamie, Great read finished off half of it this wknd. The part mind of trader,the turtle mind, lessons of the turtle class phenomenal reading. Can't wait to finish the rest this wknd.I highly recommend this book to everyone who participates in the blog.

VIP ( vi...a..mple as Eric call it) getting some live today.


Kas

VIP is a strange puppy but I am glad someone is making money with it.

AMX check it out new 52 week high soon low risk entry right now.

also EWZ looks good

BHI finally. Nearly bailed a couple days ago. Learning to be patient.

Bob, taking a trade on GOOG ?
I bought VIP Oct 110's yesterday.

I am in DVN on a support bounce. It had previously struggled at the $80 level. Now it broke out to a new high but the volume is weak. I am not sure why I am not comfortable with this trade.

Jamie

Mahmood,

I just wanted to let you know that I typed up something that might help you regarding your Sector/Watchlist situation. It is in the previous comments section and I am not sure if you saw it now that there is a new link for comments. See ya.

Stephen

Jeff, I'm with you. My watchlists aren't the least bit organized.

ORBC may be breaking out of a new flag

keep an eye on it

My watchlists are in notebooks and scraps of paper all over the breakfast bar.

I like Brett's organization of his watchlists because it just seems so well... organized.

liz

LPX good short candidate?

Jamie..

GOOG

I took the trade prior to the breakout above $510, and added on the breakout. Was planning on $510 holding, but did not bail when it dropped. It is at a support area, so I am still in the trade. I'll bail out on a close below $497...

Just closed out Jun positions on MA, CAT, and COL

Still sitting on MA and VIP

Anybody know how to quickly grow back finger nails?

Liz,

I will be thinking of you while you survive the in-laws.

Amy

LPX looks like it could use a little more volume for me. Good put canidate though. Thanks.

LPX, personally I'd wait for it to pull back up before getting in.

Strat...you can always get those stick-on nails! Dunno...are you the type?!

Grow back fingernails? I am afraid to ask how you lost them...

Chip,
Good solution to Strat's problem. That's thinking outside the box! Don't know if he's got a big date tonight.

Liz thanks for pointing out that there was a new strand. I was back in the old one chatting aimlessly to myself. There's a couple of comments back there, on JRCC and other stuff, if anyone's interested. This connection is so slow I can't be bothered to go back and try to re-enter them.

Good day, all 'round. OSG has made a great run today, but the options still haven't traded. I'm thinking this is a good bounce on decent volume.

PENN looks like a good entry point too.

Chip.. No, I'm not the type :-)

Bob, see 12:12 post above...

MRVL starting to turn over??

all in favor of AYE, say aye?

Chris

Hey Man, Liz just left to Kickboxing,
We talked about it and we figure the best day for us would be on Wednesday thru Friday July 11th-13th. The time doesn't really matter we'll just borrow my Dads car and meet you there.

Grant

PAY

I am not in this, but I like the way it is setting up....

Keeping this on my list...

Grant,
I'll be on my best behavior. I've had enough hammers thrown and cars driven at me that a kickbox to this tired old body would just about end it. I'll bid for an Edmonton layover somewhere in there. My schedule won't be out until around the 26th, so I'll let you know what transpires.

GS hasn't broken the trend but it sure seems to be running out of steam. Glad I closed out all but one contract... I don't know what to do with this last one. It's lost all my profits today.

SPWR

Hey Grant,
I'll try to get something that Catherine could tag along on. It's too bad Lloydminster is not west of Edmonton or I'd suggest I rent a car and we meet in Jasper. Don't think there's much out east.

Bob take a look MNX!

Chris

Come on Saskatchewan is a destination hot spot.=) Were up to meet anywhere I'm sure by that time well need to take a little break from the parents. I luv'em but somehow taking a vacation to see them never seems like much of a vacation. So, you name the place and we'll be there. Liz and I would love to meet Catherine to, then me and you can swop our terrifying stories of abuse!=0

Grant

I'm going to the park with the kids I'll be back ina few

MNX
Nothing comes up..

maybe $MNX??

NMX my mistake!

Bob do think it hit it,s head?

David S,
Thanks for the heads up on AMX. I like everything about this stock and wish I'd looked at it a few days ago. Got into some NOV 65s today.

I would just like to announce that today is the first day I have ever had a stock reach my Target #2. (((((Golf Clap))))))

I have 2 targets on every position before I enter. The position is COG. I enter on the break of the flag on 6/12 intraday and never looked back:)

Target #1 was previous high at $39.85
Target #2 was $41.61 (measure of flagpole added to breakout point)

Today is a shooting star of sorts and I am going to tighten up my stop to lock in about 90% profits. I am going to heed Jeffs advice and see if this winner will run a bit more tommorow - if not, I do not mind a bit.

I couldn't be happier about this small success and I have to thank Jeff for the phone calls, emails and support. Thanks to everyone on this blog as well for all the awesome tips and advice and everything else. Thank you, thank you! (((((Continued Golf Claps)))))

Based on this trade alone I will be quitting my job and trading full-time. Just jokes:)

-Stephen

TRMB

Anyone take it yesterday.. :)

Jeff

Finally turned positive on ISIL today. Learning a lot about patience after bailing on the realty stocks way too early. Great call on that and SLB. Thanks.

NMX

Lot a volume to get it up there. No trade here for me...

Grant,
Sorry about the in-laws comment...I guess that's your family.

Stephen,
Great job on the trade! It sounds like everything went as "planned". Way to be disciplined.

Jeff,
I too bought 2 June call contracts ISIL on 4/26 and sold 6/8. I saw a flag formation, breakout, down, up and channeling sidesways. Since there was little time left, I sold for a small loss and moved on. Who would have predicted the movement today? I do see the sym. triangle and squeeze hindsight.

LEAP

Anyone in BHI it had a nice move today.

GRMN done with the run?

John LEAP looks like it is at support but for how long??

Yes, I'm in BHI.
I posted about it earlier up there somewhere.

BIDU

Who posted that about GRMN? Why do you think it is done?

GRMN is only done if your rules tell you it is.

Optionfan, I see the support and it is duly noted. Thank you. I also see a symmetrical triangle that it is breaking out of today with ample volume. I have a six point move as my target.

I have seen patterns with support/resistance just below or above the breakout points that have held and have seen them become resistance/support.

Time will tell.

there is a new thread, or string, or whatever its called

Option addiscts,

What do you think of AKAM for puts play ? It has tested 50 area and started going down the last two days?


Kas

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...I'M AN OPTION ADDICT...I'M AN OPTION ADDICT...I'M AN OPTION ADDICT... ...I'M AN OPTION ADDICT...I'M AN OPTION ADDICT...I'M AN OPTION ADDICT...

About me

  • I'm Option Addict
  • From Saratoga Springs, Utah, United States
  • I am a professional trader and an instructor for Investools. I've had relations with the markets for 9 years. Born in Concord, CA, but reside in Saratoga Springs, Utah. Father of THREE, Husband of one.
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