These days placing a trade in the early morning of the U.S Equities session brings with it, a high percentage chance – of just getting your face blown off.
Understand that the vast majority of what the industry defines as “dumb money” refers to those trades placed “before the bell” – as well those placed within the first hour after.
The “smart money” is generally buying or selling during the final hour of trading.
Pulling this apart – it makes pretty good sense. Newbie traders driven purely by emotion, catch wind of a news story overnight, or perhaps on the early morning financial news and “rush to get in” with fear of missing the move. Like lambs to the slaughter more often than not, price drops out from under them, fear sets in, perhaps even panic, and shares are then dropped / sold – only to be picked up on the cheap by the “smart money/big boys” just moments before the close.
Wash.Rinse.Repeat – and so the market goes.
For the most part, I view the “entire trading day” during the U.S session, as being nothing more than a meat grinder for retail traders, who generally enter at the wrong time, and in turn – are easily shaken out of their positions.
- Do you find it difficult to resist the urge to buy in the early morning?
- Do you think you could learn to condition your behavior, and consider buying the close?
USD on day 3 in a row literally “flat as a pancake” as Thursday is now in sight. I’m “still” holding a number of pairs (10 pairs actually) with little concern – short of being bored to death. I’ll keep my eyes open late afternoon and have little expectation of “anything big” happening here today.