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Trading the market open can be risky due to increased volatility and the potential for losses to stack up quickly. It is important to have a pre-market checklist and filter to determine whether the conditions suggest taking a trade at the open or avoiding it. Depending on the type of open, like a momentum ignition, fake and fade, or choppy open, different strategies such as joining a drive, fading moves, or scalping 1 minute moves may be applied. It is also important to watch for potential flushes, characterized by an extended move followed by an immediate bounce, as these can present trading opportunities.

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Edwin Wong
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137 views36 pages

Untitled

Trading the market open can be risky due to increased volatility and the potential for losses to stack up quickly. It is important to have a pre-market checklist and filter to determine whether the conditions suggest taking a trade at the open or avoiding it. Depending on the type of open, like a momentum ignition, fake and fade, or choppy open, different strategies such as joining a drive, fading moves, or scalping 1 minute moves may be applied. It is also important to watch for potential flushes, characterized by an extended move followed by an immediate bounce, as these can present trading opportunities.

Uploaded by

Edwin Wong
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Disclaimer

Risk warning: Spread bets and CFDs are complex instruments and come with
a high risk of losing money rapidly due to leverage. 77.6% of retail investor
accounts lose money when trading spread bets and CFDs with this provider.

You should consider whether you understand how spread bets and CFDs
work and whether you can afford to take the high risk of losing your money.

Trading derivatives is risky. It isn't suitable for everyone and, in the case of
Professional clients, you could lose substantially more than your initial
investment. You don't own or have rights in the underlying assets.
Past performance is no indication of future performance and tax laws are
subject to change. The information on this webinar is general in nature and
doesn't take into account your or your client's personal objectives, financial
circumstances, or needs.
Daytrading Club

Scalping The Open


“We should always be asking ourselves: Is this something that is, or is not, in
my control?”

-Epictetus
Topics For Today
● Trading the indices ‘open’
● Risks and challenges
● Configuring your charts
● Open types and categorisation
● Pre open filter process

● Momentum ignition identification


● Two way open & strategy
● Scalping 1 minute moves
● Flush identification & strategy

(This is for information purposes only, you should always do your own research into
strategy suitability and efficacy)
The Open

● We are defining the open as either (GMT)

○ 8am DAX, FTSE (GER 40, UK100)


○ 2.30pm DOW, S&P, NAS (US30, US500,
NAS100)
Scalping & Open Risks
● Trading the open can be risky, why?

● Tilt trading
● Loss stacking
● Activity
● Scalping - high activity, edge diminishes, we still
want to be particular about our activity zones.

If your discipline is still a ‘work in progress’ stay clear


of the open. Work on longer term holds and sticking
to your rules. Some traders do very well avoiding the
open… so it’s not a one size fits all.
Optimal Chart Setup
TradingView Setup:

1. Single market view (overnight)


2. Single market view (RTH)
3. Quad market view (major indices)

Set the time frame to allow all of the useful price


data onto your screen.
24hr Chart
RTH Chart
Quad Market Screener
Gauging The Open Type Before The Bell
www.tradersmastermind.com/pre-market-checklist/

As a reminder:

● Daily Chart
● ‘Overnight’ range
● Gap expectations
● Open position in range

This is important as it will help us use the right tool for the
job, and most importantly not use the wrong one.
Daily Filter
Trade or No Trade?

● Your default setting should be no trade!


● Have a filter for when to even consider risking any capital
at the open.
● Map out your ideas
● Daily Chart > Overnight Action etc
● If in doubt stay out and let the dust settle.
● Easy to get seduced by volatility

But if you do decide the supply demand imbalance is


significant then we need to work out a plan of attack…
Map out the open

Mapping out the


possible opens
(good luck trying to
read that…!)
We have a few choices of open type
1. Volatility expansion/breakout/momentum ignition
2. Fake and fade
3. Scalp the tape rhythm

Market Profile Categories:

1. Open Drive - 1
2. Open Test Drive - 2
3. Open Rejection Reverse - 2
4. Open Auction - 3
Opening Drive
Opening test
drive
Open Auction
Open Rejection
Reverse
Momentum Ignition Identification
This is the opening drive play:

Clues:
➔ Large overnight range
➔ Breakout of a daily pattern
➔ Opening near to the high/low of the overnight
range

Open:
➔ Big persistent drive in one direction
➔ Urgent move
➔ All indices in sync
Momentum Ignition Setup
Join the move -
➔ Use small pullbacks and pauses as entries. Flags,
single candles.

➔ Wait for a pause or pullback of 20-30 ticks (DOW


average drive volatility, calibrate for the move
you are trading)

➔ Buy when price stalls* OR wait for a break above


the high of the first red candle. (for a long drive)

Tight stop - this is a momentum play!


Candle breaks

1 Minute
15 second
Candle breaks
1 Minute

15 second
Candle breaks

15 second
Two Way Open Type (Boomerang open)
➔ Pushes in one direction
➔ Fails to follow through
➔ Reverses back the other way
➔ Often better to align with the overnight trend
rather than try to be clever!
Two Way Open Type (Boomerang open)
Overnight = large range, gapping up (align with trend)
➔ Pushes down to ON
support
➔ Catches a bid that fails
➔ Catches 2nd bid that rallies

Systematic trigger ideas:

1. Buy above last bar high


2. Buy above 1st green bar
high

Stops?
Targets?
Scalping 1 minute moves*
For the very aggressive trader:

1. Identify opening drive type open


2. Join the momentum
3. Hold for 60 seconds and out (use for stop also)

OR

1. Identify choppy open and FADE 1 min moves

*Limited edge but a good short term price action


drill (eg if you want to encourage quick decisions)
Fade
Vs
May look good, but only 1 minute of drive
Follow More obvious S&D shift
2 Period ROC
Trend > Flips down > Flips up > Buy
2 Period ROC
Trend > Flips down >
Flips up > Buy
Flush Identification
● A flush often happens after a large gap.

● It’s often the last gasp from the prevailing trend,


before it’s exhausted and can backfill.

● As scalpers we want to prepare for the flush in


the right conditions and look for the trigger signs.

*We haven’t seen traditional flushes for a while but it


pays to be prepared
Flush Identification
Trigger Signs:

1. A large extended move in one direction over a


very short period of time
2. Immediate bounce off that low (rather than stall
at the low)

Entry ideas:
After 3rd wave of selling look for the final extreme
followed by large green candle.
Flush Identification
1
Extended down move -
2 already very stretched
3

Another wave of panic


selling
Very large last few red
bars.

Immediate bid that


holds at highs of
candle (largest green
range too)
Summary
➔ We want to try and get as many clues as possible
to the open type before the bell.

➔ Then we want to quickly judge the open type in


the few minutes after the bell.

➔ Then once we have categorised the open type we


deploy the correct strategy for that open.
www.tradersmastermind.com/open

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