The 6 Best Times Of The Day To Trade A Stock

1. Post-opening buying: Let's say a stock rises 5 percent or more during the opening and there's no news about it. Typically,

the stock will fall off after 30 minutes of trading. Why? Market makers may be trying to open the stock at an artificially

high price to sell off excess inventory they've acquired the day before. However, if the stock doesn't fall after 30 minutes

of trading, it's liable to continue rising for the rest of the day. Tactic: Buy at 1/16 above the day's high after the

opening. Set a stop at 1/16 below the day's low.

2. Post-opening selling: The opposite of the above strategy. When a stock opens lower on no news, it could be that sell

orders from nervous investors have piled up since the close of trading the day' before. Sometimes market makers open the

stock artificially low, to draw in more panic sellers. This allows them to accumulate shares, because market makers as a rule

buy on price declines and sell on price increases. After 30 minutes, the stock usually recovers in price and normal trading

begins. The market makers profit by selling the inventory they've accumulated at the lower price. However, if the stock

continues to drift lower after 30 minutes, chances are it'll decline more during the course of the day. Tactic: Sell short at

1/16 below the low of the day; set a stop at 1/16 above the day's high.

3. Playing the spread: This one's really simple. Buy at 1/16 above the bid. Sell at 1/16 below the ask. The strategy works

best with non-volatile stocks where the spread is at least 3/8 of a point. When successful, you make a quarter point per

trade, or $250 on 1,000 shares. You can also short the spread by selling short at 1/16 below the ask and covering at 1/16

above the bid. Problem is, it's not always possible to get in and out at these levels. Market makers may easily spot what

you're doing and adjust prices so they blow you out. Often day traders try this tactic several times during the day before

they succeed.

4. Grinding: Another relatively simple tactic. Follow the message threads at, for
instance, Silicon Investor for a particular stock. When everyone is screaming that the stock is going to make a move, jump in

with the mob. Be content with an 1/8 or 1/4 point. Then get out before the rush.

5. Fading the market: With this contrarian strategy, you buy into weakness and sell into strength. That is, you buy stocks

with small percentage declines relative to the market. You're hoping they'll gain when the market reverses. Hold off buying

until the stock trades above its opening. Reason: Previous buyers of the stock will sell to prevent loss, thus driving the

price down in the short term.

6. Shop the final hour: Stocks often ease off their highs of the day during the last hour of trading. Why? Because day

traders and market makers seek to exit their positions and lock in profits. A price downturn often occurs during the last

hour of trading as many seek to exit their positions. This downward momentum can create some lucrative short-selling opportunities.

Article Source: http://www.a1-articledirectory.com

Larry Potter is a recognized authority on the subject of trading. For a FREE report on HOW TO TRADE FAST and a 2-week trial to Stocks2Watch®, visit: clik.to/stocks2watch and commodities-business.blogspot.com

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