We all love highly direction markets. Especially a strong momentum drive right from the open.

But not every day is so kind to offer one. Sometimes price gets stuck at the open.

And if we don’t have plans to manage ourselves during this opening chop we risk hitting our session stop before the day really gets underway. Ok… maybe not you… but I know I’ve done it.

There is of course our usual rule – “If two trade attempts fail, consider standing aside. If three fail, it’s a compulsory stand aside”.

But there is another option that can help you survive any opening chop, even if you haven’t made any trades.

I posted these via social media on Monday and Tuesday.

<image: Using the Opening Range to minimise early damage to your P&L>

<image: Using the Opening Range to minimise early damage to your P&L>

Let’s step through this second example.

<image: Using the Opening Range to minimise early damage to your P&L>

<image: Using the Opening Range to minimise early damage to your P&L>

(The First Principle, for those not familiar with how we assess likely future price movement.)

<image: Using the Opening Range to minimise early damage to your P&L>

<image: Using the Opening Range to minimise early damage to your P&L>

<image: Using the Opening Range to minimise early damage to your P&L>

<image: Using the Opening Range to minimise early damage to your P&L>

<image: Using the Opening Range to minimise early damage to your P&L>

Please note that I’d make this decision even if I had no trades so far. This decision is nothing to do with the trades. It’s simply recognition of price being stuck in the opening range. And a conscious decision to limit risk exposure until price removes itself from the chop zone.

<image: Using the Opening Range to minimise early damage to your P&L>

<image: Using the Opening Range to minimise early damage to your P&L>

There are many ways to use an Opening Range. You can use it simply as a bias reference point (long above, short below). You can use it to provide trade opportunity, either through an initial opening range breakout, or through subsequent retests.

Or in this case, simply as a tool to help reduce early-session damage to P&L when the market gets stuck in a bull/bear slugfest at the open.

A tool to help survive any opening chop through (a) quick recognition of the market being stuck in the opening range, and (b) limiting engagement until it’s broken and holding clear.

Happy trading,

Lance Beggs

 


 

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4 Comments

  1. I love the blogs of YTC. I believe this is the weapon (knowledge) that i was missing in my armoury (trading skills) which would help me in battle field (market).

  2. Shouldn’t we simply wait till the 9 eastern candle concludes? By than it should have already reched to a previous S or R.

    Also, these days watching the 10-year and USD chart was very very helpful for me to double my account in March. Could’ve been a lot more but I was controling the risk.

    I told you many times – I have learned the TA from your videos long time ago. Thanks a lot!

    1. Hi Tariq,

      The market opens at 9:30am. Do you mean wait till 10:00 to trade?

      Certainly that is one way to avoid opening chop. Just don’t trade the open. Stand aside for the first 30 minutes and then commence trading off the structure that has developed.

      The counter-argument is that the open is a time you do want to trade, because that is a time of incredible opportunity. The 09:30-10:00 range is typically the best 30 min range of the day.

      My plan is to trade the open. I seek to exploit that opportunity. But I do so recognising the danger that exists when the price doesn’t provide strong directional conviction and instead gets stuck. That is the point of this article. Quick recognition of a stuck market. And quick adaptation.

      But yes, standing aside is a valid option. Whether choosing 5m, 15m or 30m. Any initial chop will have passed and new structure will be in place to trade off. At the expense of course of any missed opportunity. Everything in this game is a trade-off.

      Cheers,
      Lance

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