Day Trading

The first hour of trading provides the liquidity you need to get in an and out of the market. On average the market only trends all day less than 20% of the time.

Most new day traders think that the market is just this endless machine that moves up and down all day. In reality, the market is boring.

The one time of day which consistently delivers on sharp moves with volume is the morning. Assuming you are doing this for a living you will need some serious cash. Day trading isn’t something you should undertake with your lunch money.

If you were trading with a $100,000 per trade how much volume do you think your stock needs?

Assuming you were already thinking that, you need tens of thousands of shares trading hands every 5 minutes. Reason being, you need enough volume to enter the trade, but also enough that you can potentially turn around in a matter of minutes and close out the same trade you just put on.

Now that the market has opened. the first noticeable increment of time is the first five minutes. I have no study to back this one up, but from my own experience and talking with other day traders the 5-minute chart is by far the most popular time frame.

Within the first 5-minutes you will see a number of spikes in both price and volume as stocks gap up or down from the previous day’s close. This will often be driven by some sort of earnings announcement or pre-market news. This first five minutes is arguably the most volatile time of day.

There is no defined range and odds are the previous day’s range has been eclipsed by the gap. With no clear boundaries for where to go, to short or buy after the first 5 minutes, in my opinion, is nothing more than a gambler’s paradise. If you are serious about your trading career stay away from placing any trades during the first 5 minutes.

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