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Although it is not necessarily the best idea for you to trade during the first hour of the day, you still have the option of doing so. It is critical that you use a few simple strategies.
Prepare Good Limit Orders
The first strategy for trading during the first hour is to establish a series of limit orders. You have to plan stop-loss totals that end at certain values. You might also add signals that let the trader know you need to sell when it moves to a profitable level. Set up orders so that you know when you will sell. This keeps you from bearing with losses following significant changes that can develop during the first hour of trading.
Watch For Trends Before the Market Opens
One of the reasons why a stock might change dramatically during the first hour is because people think that the stock will keep moving toward a certain trend. People might make their first trades with the belief that the trend will continue. The trend might temporarily reverse as people enter into the investment by noticing how changes are happening.
Watch How Strengths Change
The first hour of trading is a time when a stock can really make some significant changes. It could have changes of 5 to 10 percent of a stock’s value. Check the strengths of a stock change alongside its moving averages. The stock should start to move back toward its moving averages before you start trading it. This could happen during the first hour or after that hour ends.
On a related note, look at how the candlesticks on a chart are forming. It might be easier to enter into a trade when the sticks are moving sideways. That is, there is not much of a change between the sticks as they are formed.
Be extremely cautious when looking for something that you could invest in during the first hour of the trading day. It is possible for you to get a good deal from something during the first hour, but you still need to be careful. In short, try to avoid trading during the first hour of the day if possible.
