If you are a day trader there are some people that feel like you need to be in a trade all day long. This includes anywhere from the beginning of the session all the way through the end of the day. You can also include the premarket and aftermarket as well. There are a lot of things that people don’t think about when it comes to trading and saving money. It’s taking those trades that don’t give you an edge that will end up hurting you the most. In fact, most trades taken during certain periods of time during the day will most likely not work compared to the other times of the day. We’ll go over some of the different sessions of trading and how you can save money and avoid the big trading mistakes.
The Morning Session
Obviously, the morning is the most profitable time of the day. If you’re new or advanced in daytrading, the morning session provides the most setups. This is the time where most traders are really in tune and watching the market. This also includes institutional money managers and more. Even the algorithms that are set to trade, will work heavily in the morning. The premarket is also considered the morning session, but it doesn’t carry as much weight as after 9:30 AM New York time. up until around 11:30 is considered the sweet spot when it comes to trading. If you can find your setups in the first half-hour of the day you will find the best trading momentum. Many times after this can be a crapshoot and if possible should be avoided.
The hardest time to trade is during the lunch session. If you think about it, tons of traders and robots will go off-line for about an hour to two hours to get something to eat or recharge. This is when market momentum will start to slow down heavily. This is the timeframe where the edge that you are looking for is not available. If you can avoid the lunchtime hours during the trading day you could end up saving a lot of money throughout the session or year. Yes, there are those times when things happen at lunch and you should still be in tune, but try to avoid anything that’s not necessarily the best idea. A trade that works at 9:45 AM may not do the same thing at 12:45 PM. Once you understand about the lunchtime hours and avoid this area, you’ll discover how to just sit on your hands to avoid trading altogether.
The Afternoon Session
The afternoon session usually resumes around 2:30 PM. This gives you around an hour and 1/2 of some decent trading. Most likely after three is your best time to trade in the afternoon. You can start looking for things to set up around 2:30. There are setups that you should avoid that may have worked in the morning but should be avoided in the afternoon. This is a much better time to trade than at lunchtime but you also see certain traders leave for the day or robots get turned off. There are a lot of things to consider when it comes to picking your timeframe. In the afternoon as the market starts to make its move look for reversals of the initial move in the afternoon. There are a lot of times where fakes are made and traders get trapped. If you can avoid being trapped in the afternoon you will be way better off.
There are a lot of things to consider when trading during the day. That first half-hour will be your most lucrative time more often than not. If you can avoid lunchtime and just trade the morning and afternoon you will be way better off. There are always other things to consider like news and announcements that may spark trades during lunchtime hours. Good luck and always look for that edge.