Let The Stock Market Spit Money At You Like A Broken ATM Machine!
The closing price is not equal to the opening price when it comes to trading in the stock market. You need to know that the closing price is much more important than the opening price. You are about to discover a little known truth that will have the stock market shooting out money like a broken ATM!
Let's begin.
The closing price is the value set for a given stock by all market participants trading that stock. It is the final consensus of value assigned to a stock on any given day by the crowd. It is the price everyone sees after work. It is the final price displayed on all daily stock charts people research at the end of a given trading day. In the futures market, the closing price is very important because trading accounts are settled based on it.
Professional and institutional traders will trade all during the day. At market open, they take advantage of opening prices by fading gaps. They will buy low openings and sell high openings. They will then unwind those positions as the day progresses. They routinely trade against market extremes and bet on a return to normalcy for any given stock. When a stock hits a new high and then volume drops off, professional traders will sell which pushes the market lower. When a stock hits a new low and then volume begins to drop off on the sell side, professional traders buy which pushes the market higher.
Amateur traders like you and I behave very differently. Amateurs like us usually trade at market open and then drop off as the day progresses. Most amateurs have to go to work and so they trade on the west coast at market open before work. They don't check the trade again until after work when they get home. Even traders on the east coast will sneak in a buy or sell at market open while at work and then not check their trading account again until the end of the day. At market close, the participants who are still trading are mostly professional traders.
Knowing what time of day the amateurs trade and what time of day the professionals trade gives you a huge advantage in the market place! Think about it for a minute. Closing prices reflect the opinions of the professional and institutional traders while opening prices reflect the opinion of amateur traders. Look at almost any stock chart and you will see how often the closing and the opening ticks are at opposite ends of a stock's daily candlestick. This tells you that professional and institutional traders are usually on the opposite side of the trade as amateurs are. So which group should YOU trade with? Why the group that has the most money to invest in the stock market because they can move the stock the most. This means that you want to be on the side of the trade that professionals are on. Trade with the professionals, not against them.
Let's say a stock you are long in goes up to its day's high at market open and then drops the rest of the day and finally closes near its day's low. You need to close out of your short term position. Why? Because this gives you a signal that professional traders are fading against your long position. - 23196
Let's begin.
The closing price is the value set for a given stock by all market participants trading that stock. It is the final consensus of value assigned to a stock on any given day by the crowd. It is the price everyone sees after work. It is the final price displayed on all daily stock charts people research at the end of a given trading day. In the futures market, the closing price is very important because trading accounts are settled based on it.
Professional and institutional traders will trade all during the day. At market open, they take advantage of opening prices by fading gaps. They will buy low openings and sell high openings. They will then unwind those positions as the day progresses. They routinely trade against market extremes and bet on a return to normalcy for any given stock. When a stock hits a new high and then volume drops off, professional traders will sell which pushes the market lower. When a stock hits a new low and then volume begins to drop off on the sell side, professional traders buy which pushes the market higher.
Amateur traders like you and I behave very differently. Amateurs like us usually trade at market open and then drop off as the day progresses. Most amateurs have to go to work and so they trade on the west coast at market open before work. They don't check the trade again until after work when they get home. Even traders on the east coast will sneak in a buy or sell at market open while at work and then not check their trading account again until the end of the day. At market close, the participants who are still trading are mostly professional traders.
Knowing what time of day the amateurs trade and what time of day the professionals trade gives you a huge advantage in the market place! Think about it for a minute. Closing prices reflect the opinions of the professional and institutional traders while opening prices reflect the opinion of amateur traders. Look at almost any stock chart and you will see how often the closing and the opening ticks are at opposite ends of a stock's daily candlestick. This tells you that professional and institutional traders are usually on the opposite side of the trade as amateurs are. So which group should YOU trade with? Why the group that has the most money to invest in the stock market because they can move the stock the most. This means that you want to be on the side of the trade that professionals are on. Trade with the professionals, not against them.
Let's say a stock you are long in goes up to its day's high at market open and then drops the rest of the day and finally closes near its day's low. You need to close out of your short term position. Why? Because this gives you a signal that professional traders are fading against your long position. - 23196
About the Author:
May you make a lot of money in stock trading after reading this article. For more of Lance Jepsen's free stock trading advice go to stock market
posted by X - Men @ 12:49 AM
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