Learn Secret Stock Market Trading Trick That Spits Out Money
The closing price is not equal to the opening price when it comes to trading in the stock market. You need to know that the closing price is much more important than the opening price. You are about to discover a little known truth that will have the stock market shooting out money like a broken ATM!
Let us just dive right into this.
The closing price reflects the final consensus of value for the day. This is the price most people look at when they get off work or when they print their daily charts at the end of the day. It is especially important in the futures markets, because the settlement of trading accounts depends on it.
Institutional and professional traders will trade throughout the day. Their behavior is as follows. At the opening, they take advantage of opening prices by selling high openings and buying low openings. They then close out of those positions as the trading day goes on. What they do day in and day out is to trade against market extremes, also called fading. They are betting on a return to normalcy in any given market. When a stock price reaches a new high and then buy side volume falls, they sell and push the market down. When a stock price reaches a new low and then sell side volume falls, they buy and push the market up.
The waves of buying and selling by amateurs that hit the market at the opening usually subside as the day goes on. Why? Most traders on the west coast have a day job they have to go to so they log-on in the morning before work, put on a trade, then check it when they get home. Even traders on the east coast will put on a position at market open while at work and then check it at the end of the day. Near the closing time the market is dominated by professional traders.
Knowing this is a huge advantage! Why? Because it means that closing prices reflect the opinions of professionals. Look at any chart, and you will see how often the opening and closing ticks are at the opposite ends of a price bar. This is because amateurs and professionals tend to be on the opposite sides of trades. You want to trade with the professionals, not against them.
You should consider closing out your long position if the stock you are trading opens and then goes up near its day's high but drops the rest of the day and closes near its day's low. What this tells you is that professionals are fading against your position and so you need to get out. - 23218
Let us just dive right into this.
The closing price reflects the final consensus of value for the day. This is the price most people look at when they get off work or when they print their daily charts at the end of the day. It is especially important in the futures markets, because the settlement of trading accounts depends on it.
Institutional and professional traders will trade throughout the day. Their behavior is as follows. At the opening, they take advantage of opening prices by selling high openings and buying low openings. They then close out of those positions as the trading day goes on. What they do day in and day out is to trade against market extremes, also called fading. They are betting on a return to normalcy in any given market. When a stock price reaches a new high and then buy side volume falls, they sell and push the market down. When a stock price reaches a new low and then sell side volume falls, they buy and push the market up.
The waves of buying and selling by amateurs that hit the market at the opening usually subside as the day goes on. Why? Most traders on the west coast have a day job they have to go to so they log-on in the morning before work, put on a trade, then check it when they get home. Even traders on the east coast will put on a position at market open while at work and then check it at the end of the day. Near the closing time the market is dominated by professional traders.
Knowing this is a huge advantage! Why? Because it means that closing prices reflect the opinions of professionals. Look at any chart, and you will see how often the opening and closing ticks are at the opposite ends of a price bar. This is because amateurs and professionals tend to be on the opposite sides of trades. You want to trade with the professionals, not against them.
You should consider closing out your long position if the stock you are trading opens and then goes up near its day's high but drops the rest of the day and closes near its day's low. What this tells you is that professionals are fading against your position and so you need to get out. - 23218
About the Author:
I hope you make a ton of cash in the stock market after studying this article. For more of Lance Jepsen's free trading secrets please visit stock market
posted by X - Men @ 2:29 AM
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