I would like to make money at the day session opening. I read several postings that entering a trade on a breakout of the first five minute bar is the technique to use.
Is this true?
Can anyone give me any additional tips/tricks/traps on this method? I'd like to use this method to trade the ES, NQ, TF, NG, ZN, DX, 6J.
any advice, links book/video suggestions would be greatly appreciated.
This is a very simple strategy and is easily backtested, so I would suggest you do this and find the objective answer yourself. Then you will have confidence to try it or not.
Personally, I would logically say that this strategy is just too simple (read: "dumb") to work on any consistent basis. Of course, you did not provide any details such as risk management (where are you wrong?), targets, etc, so there are quite a few variations you could try.
Logically, ask yourself why the first five minutes is significant (compared with, say, the first ten minutes, for example). Maybe it is to you, maybe it is not.
Trading is not a mindless endeavor, so you will have to think through these things, test out your ideas, and see what works best for you. Never take anyone's word for something as fact. Probably 90% of what you read (even this perhaps ) is either irrelevant or simply full of crap, so learn to trust your own ideas and analysis. Trading is a very individual sport. You need confidence in what you are doing so the last thing you want to do is trade based on others' ideas without thinking them through or observing the effectiveness of those ideas for yourself.
I remember having read a thread on futures.io (formerly BMT) where the person would trade the break of the first 4 minute range and would use a multiple of that range to scale or take profit or to place his stop loss. He said he was profitable but i can't remember which thread it was.
I listed five minutes in my posting because that seems to be the bar that "trade-the-opening" traders initiate a position off of.
I'm trying to gather data from traders who actually trade off of the first five minute bar of the day session. I want to get their methods, filters, stops. It seems that this is a profitable time of day to trade. Even more so than end-of day. OR AM I WRONG?
Is the end of day the best time to trade?
Am I trading the wrong side of the day?
The ONLY thing I DO know is that lunchtime is not the time to trade because of "choppiness"
Some traders like to trade the first hour particularly, as it often has a larger range than other parts of the day and thus more opportunity. Others like to wait until the market has been open and shown its hand a bit before jumping in. And contrary to popular belief, the middle of the day can actually present some great opportunities. Sometimes the market will do very little in the first two hours, and then it will bottom out and push up for the rest of the day, and the most opportune time to get in is around 12 noon ET.
An actual statistical study of the last 57 trading days for the ES contract reveals that the median range for the first 130 minutes is 7.25, the second 4.5, and the third 5.6. So, while the middle part of the day has the smallest range usually, it's not that much less than the last third of the day. Clearly, the first third of the day presents the most opportunity, but this is to be expected. Large range does not necessarily equal "best time to trade," as sometimes the less volatile middle of the day is safer and thus some traders are more successful during this time. You have to find out what works best for you.
You are looking for answers which only you yourself can answer; the question is, what is the best time of the day for YOU to trade? Someone else's preference really means nothing, it's what works for you.
It's not exactly what you're looking for but it's close in spirit. Scott Andrews, who has done webinars here, has a website called Master The Gap which specializes in trading the overnite gap but also makes trades based on both the opening 15 minute range and the first hour range.
Trading a breakout of the first bar is like everything else: dependent on context. Is that first bar big or small, doji or trend bar? Is there a gap and how big is that gap? Is it continuing a trend or is it in a trading range from the prior day? Is it near an area of potential support or resistance? You get the idea. The ultimate goal is to decide which side will be stronger on a breakout of that bar, buyers or sellers.
Because the market is balanced buyers = sellers, the other side will need to read the first 5 min candle differently than you do. Or they read the candle correctly and took the opposite side of your trade.
It would appear to simplistic. Better is a 5 minute channel or drawn trend line, flags and wedges, or progressive 5 minute high low and higher high candles showing strength or weakness in the opposite case.
I could agree that an intraday 5 minute chart is as close to real price action as one will get.