Trading Any Time
Just Because we “can trade” does not mean we “should trade”
Experienced traders can trade any time the markets are open (from 6pm Globex open to 4pm RTH close) but newer traders should avoid the temptation to trade "just because" the market is open.
There are certain "time zones" within the trading day that are less violent than others (a violent market requires a wider stop). Simply avoiding these "high volatility" conditions can remove a LOT of risk.
New traders should be looking for "less volatility" and low risk trading zones; this means avoiding any trading between
8am - 10am
3pm - 4pm
Trading outside of these "high volatility" timeframes will generally offer a trader chances to trade with a smaller stop - but that is not promised. One thing you can do is use a volatility indicator. Here are a few different ones to choose from:
Bollinger Bands
ATR
TTM Squeeze
CSI
These volatility indicators are not there to tell you where to get in or get out; these tools are there to tell you if volatility is present (which is always) and if there is volatility present - how much volatility is there today?
Trading in low volatility means we can use a smaller stop but it also means the market is less likely to change course randomly. When it comes to low volatility - the "lunch zone" between 11am and noon is generally considered "low volatility" as well (maybe too low).
What about today
After a while you'll likely begin to realize that the type of trading day we have "today" is very much like a day we have seen before; in the Futures Index like the /ES and the /NQ the "type" of trading days are limited.
"big move" days,
"big move + reversal" days,
"small range" days,
"big range" days,
"small range" mornings with big breakout afternoons,
shortened holiday days.
Seen this before...
So our approach is to define the trading day and our expectations. Vocalize or "State the Conditions" either through a journal or some other form of record keeping. In psychology this is considered putting information into the "active side" of our brains.
Develop a thesis for the day; what is your expectations? You are going to be wrong a LOT when starting to do this - but over time you will get good at defining what type of day we should have.
Familiar
Once you begin to recognize the types of days you can start to anticipate the days actions by comparison with a previous day.
Firms and institutions spend millions on developing a trading system and spend weeks building up or tearing down a position; they continue to do what works and very seldom "change up" their approach.
While we may not see or even understand exactly what their system is or how it's designed we can see how that system affects the markets.
Big Moves
Often - new traders tell me they are trying to catch the big moves of the market but then they also tell me they are not comfortable with using a wide stop.
There are a lot of pro traders who can (& do) capture big moves while also not using wide stops but that comes from experience and planning - (aka: skill) ... it is a learned tactic that new traders seldom have.
If you want to trade big moves (like the open or an economic event) then you will want to develop specific trading strategies to do exactly that. Personally - I do not like to trade these conditions and will always be happy to explain why if you ask.
Getting "some" - not "all"
