Trade the Opening Move, Lose Your Shirt
I’ve said it once, I’ll say it again, and I’ll likely continue to say it until I die…
Do not trade the first move of the open.
Just don’t do it.
But Kenny, the stock I’m trading is below VWAP. It’s a short!
Think about what happens at the very beginning of the day.
Traders either have to dump their shares for profits or cover their shorts in the first couple minutes of the day.
And if you try and navigate this chaos, you need to be ultra-fire quick to get in, and cash out if things don’t go your way.
Let’s take today’s example of UAL as an example…
UAL had the perfect example of the Fo’ Sho’ Bro this morning as shown in the picture above.
If you had shorted the stock on the very first candle because it was “going down”, you would have been a part of that fake out.
Then the stock did a quick 180 to shake out the shorts, climbed up and broke out.
Shorts at the open had to cover.
Buyers decided it was time to get in.
And there you have your breakout.
Now, if you were like me this morning, and sat back until you understood what was happening you would have been sitting pretty on this trade.
But you need patience.
If you trade around the VWAP, patience is key.
And unless you have the fastest fingers in the market, it’s extremely difficult to navigate the chop in the first few minutes of the day.
Let the chart confirm your buy or short.
And then hammer it home when the setup is confirmed.
October 20 2022
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