When to Trade What, Part 3 of 3

[PristineTrading 10]

Good Morning All:

 

If the title sounds a little confusing, it was meant to. The issue to be discussed today is not just 'when' to trade. There are trades that can be done any time the market is trading. That does not mean that you should be trading all day long, it just means that the times you pick to trade can be any time, IF you know what to trade. This series of articles discusses this issue, and are geared toward the 'intraday trader', not the swing trader.

 

That was the opening paragraph the last two parts of this three part series. Last week we looked at the key morning reversal times, and began to discuss lunch. Today we will discuss lunch, and the afternoon reversals.

 

When to Trade What, Part 3 of 3

 

Lunch: Lunch can be a little tricky to pin point on some days. At its broadest moments, lunch begins after the 11:15 reversal time (remember, all times are ET, market time) ends the move, and can last all the way until the 2:15 reversal time. This is what typically happens on sloppy, non-trending days. On nice trending days, lunch may be as short as 12:00 until the 1:30 reversal time. The most precise reversal times over the lunch period are 1:30, and 2:15 (2:15-2:30 range on most days). Below is a typical day.

 

 

Notice a few things, and then look at the charts for yourself. These revelations will save you, and make you money, everyday.

 

1. Note the range (the fluctuations from the highs to the lows), or volatility, before lunch, after lunch, and during lunch. Note again, from last week, the power of the 10:00 and 10:30 reversals

2. Note the volume during lunch.

3. Note the last playable event was at 11:30, and the next one was at 2.15.

4. Note the narrow bodies and tails during lunch; you do not see the rest of the day.

These are the reasons traders get frustrated at lunch, real moves rarely happen on the market or typical stocks.

 

And After Lunch: After 1:30 comes the 2:15 time. If 1:30 does not begin the afternoon move, then 2:15 will. If 1:30 does produce a big move, then 2:15 is often the target. The last times of the day are 3:00, when the bond market closes and 3:30, which usually provides the high or low into the close to end trading for the day, as the last 30 minutes is often sloppy. Here is one more chart.

 

 

Here we see another typical day. You will find, when you study this, there are only a small handful of patterns that happen over and over again. Here we have a retest at '1' that holds for the end of lunch. The first playable move is the 2.15 reversal, and finally the 3.30 reversal ends the pull back for a rally into close.

 

Paul Lange

Vice President of Services

Pristine Capital Holdings, Inc.

[bobcollett 10]

Hi Paul

I have enjoyed your three articles on "when" to trade , but am very skeptical.

Have you actually back tested these times?

Do you have some figures on success/failure?

Or are you basing these times on experience?

kind regards

bobc