So many traders spend countless hours planning what to trade but many forget about the importance of when to place a trade. Even if you have a winning strategy on your side, the trade can still move against you if you placed it too soon or too late. Understanding when to place a trade is just as important as what you are going to trade. Here are three of my tips to help you consider when to place a trade.
The morning open
The morning open is filled with anticipation; this is when many orders are being filled that were placed with brokers or large institutions. The 9:30 bell will often see a big move in either direction because of the rush of trades placed at the open. To me, this isn’t the time to be entering the markets. The morning bell is not a high probability trade in my opinion. There are many days when price has a big move in one direction at the open, only to retrace the big move for the rest of the day. Instead wait a few bars until things settle in for the day to place your traded.
Lunch Time
Traders sometimes forget that they are actually trading with other people, and these people will usually need to eat at periods during the day. You will notice that there are times around noon when the markets seem quieter. If you are considering a trade around noon make sure you are trading an instrument that has enough liquidity. After all you need someone else to trade with.
Market Close
Around 4:00pm EST can see a similar flurry in the markets that was seen at the open. Market close can in my opinion be just as unpredictable as the open.
So wait a second you may be thinking to yourself…if I shouldn’t place trades at the open, lunch or market close…then when is the best time to place them? I actually like to place my futures trades between 10:00-11:30am and again between 2:00-3:30pm EST. I’ve found these two times to be a great balance of market direction and good liquidity. Everyone will find times that work best for them, but I would encourage everyone to make sure they are away of what time they are placing trades, at what times result in the most profitable trades for them.
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