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opening of the market. Very often the market is not very directional on the opening, and so it's best that unseasoned traders wait a bit before attempting to identify trends and putting their capital at risk. |
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Many considerations must be factored into the decision to commit early in the trading day. Among them are: |
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| News events, including earnings reports released after the previous day's close or before the opening | | 2. | Analyst upgrades and downgrades | | 3. | Credit market conditions | | 4. | Strength or weakness in the dollar | | 5. | Overseas markets activity (Japan, England, France, Germany) | | 6. | Commodities prices (precious metals) | | 7. | General market sentiment |
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All of the above factors can influence opening prices. Remember that market makers usually try to exaggerate moves and play off your emotionsgreed and fear. If good news (or whatever is perceived to be good news) is announced, the market makers intentionally move up opening prices far beyond realistic levels, hoping to suck in overanxious day traders. Conversely, bad news may very well be exaggerated by the market makers' precipitous markdowns on the opening. Many times an astute trader must sell a strong opening or buy a weak opening in order to profit significantly. Remember, tread easy on market openings. |
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It goes without saying that you should relate yesterday's closing price to the supervening events as you watch the market makers fix the opening prices up or down based upon their assessment of a particular stock and the market. |
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Usually, the hours of 1100 to 1400 (Nasdaq enters trades in military time), which translates to 11 a.m. to 2 p.m. for us civilians, are the slow times in day trading. This does not mean that there is no opportunity to make |
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