I've written a lot about displaying patience at the open. About waiting till the bias is clear and trading conditions are favourable.

But there are some situations where I don't display patience.

Where I'm keen to get a trade on as soon as I can.

No patience. No delays. It's game on!

One of these situations is when the market sets up a trap just before or just after the RTH Open. (RTH = Regular Trading Hours).

Today we'll look at an example which sets up just before the open.

Here's the general concept:

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

This concept can be applied in any market which offers pre-session trading leading into a clearly defined "regular" day session. Spot forex traders might apply it at the UK open, or the US open.

This example set up a break of the overnight low. Here's what I was seeing:

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

(YTC PAT FTC Ref: Vol 2, Ch 3, P143))

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

<image: Traps just before RTH Open>

Happy trading,

Lance Beggs

 


 

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7 Comments

    1. Thanks Arun,
      I’m glad you’ve found this concept useful.
      Is it applicable in the Indian markets? I’ve no idea as I’ve never traded them. You’ll need to check some historical charts to find that answer.
      Best of luck with your trading,’
      Lance.

  1. Hi Lance,

    Thank you for sharing this. When i look at the picture i am amazed at how well you read the price action and how accurate your expectation of future price movement was. That’s why i wanted to ask you this question.
    The price is clearly moving down and just prior to point 3 on the chart there was a steep downward move. Despite that you expected the market to move up to the prior high. I understand that at point 3 the downward move has stalled but i’d like to understand why you expected the market to reach the prior high instead of making a weaker move high or maybe even continuing downward.

    1. Hi Vinayak,

      You ask “why you expected the market to reach the prior high instead of making a weaker move high or maybe even continuing downward.”

      I don’t expect anything. I simply recognise the possibility that IF the move down was a trap and price can break higher, then there is potential for an opening momentum drive.

      This is not YTC PAT. It’s something unique to NQ market opens, in that they have the potential to explode in a strong direction momentum drive from the open. I’m simply capturing that, if it triggers. And then shifting to standard YTC PAT.

      So there is no expectation that this will happen. Just awareness of the potential. Should it not happen and price just moves high in a weak manner, or drives lower instead, then my “bar by bar analysis” shifts with this new information and I resume standard YTC PAT.

      Consider it multiple IF-THEN scenarios right at the NQ Open. If price breaks higher then the trap has potential to drive higher with strength. I will enter in that move. If price breaks higher but then shows weakness, then the opening drive scenario is wrong. Adapt. If price drives lower, standard YTC PAT downtrend.

      Cheers,
      Lance.

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