Market open traps… I love these so much.
I swear you could specialise in these, provided you had the patience to sit aside on days when they did not set up.
From a YTC strategy perspective, they’re a BOF Setup trading off significant overnight structure.
But there are two unique features.
The first is a breakout with an “obvious” expectation of strong movement, creating a strong “urgency to trade”.
And the second is the timing. They occur at the market open, which is a time of increased emotion, pace and volatility, all of which increases potential for traders to be caught on the wrong side of the market.
The perfect metagame trade!
Here’s the concept in textbook-perfect format: (if only markets were always like this)…
The reverse applies as well, rejecting the break of a lower level of support.
Today’s example sets up on NFP day.
And I’m not the only one who saw it. It’s great to see these articles making a difference.
Let’s start with some higher timeframe context and then look at what price offered from the open.
They’re not always home-run trades like this. Sometimes they’ll chop you up a little, before they get under way. Sometimes you’ll miss the BOF entry or get no fill, so you’ll need to search for a retest or first-PB entry.
And well, sometimes they’ll lose. But if you’re managing them well the losses will be small in comparison to winners.
If you like the concept, have a look at the following examples. And consider studying your own market and timeframe for similar opportunity.
And then be ready, watching and waiting at the open, whenever price sets up a potential market open trap.