I operate with three general levels of engagement – Trading, Trade with Caution, and Stand Aside.
Because not all conditions in the market are the same.
If you haven't done so, I highly recommend adopting a similar practice. Take some time to consider the factors that might trigger each level of engagement in your own trading business.
Today let's look at three factors which had me in "Trading" mode right at the market open. No delays. No hesitation.
With these three factors in play, I wanted to be in the first opportunity I could find.
A gap open, from a strong and persistent overnight uptrend, with a recent trap showing an inability to drop.
There is emotion in the market.
And I want to trade.
(NB. YTC Price Action Trader concepts – The First Principle is in play, PB setup)
I don't want to trade all market opens.
There are many that I classify as "Trade with Caution". Think of the opposite of today's example – a market opening in the middle of the prior day's range, following a dull and lifeless sideways overnight session. There is no emotion driving the market. And so I have no business in taking a position until something changes. Wait patiently. Let the opening structure form (5 minutes, 15 minutes, 30 minutes… or as long as it takes). And then trade off that structure.
But there are other days when I don't want to wait. Market sentiment appears to be strong and potentially one-sided. This is not a time to wait. This is not a time to "Trade with Caution".
Today was not one for waiting. It's game on. Let's trade.
Again, if you haven't done so, I highly recommend adopting a similar practice of classifying three general levels of engagement – Trading, Trade with Caution, and Stand Aside.
Take some time to consider the factors which might trigger each level of engagement in your own trading business.