Learn Secret Stock Market Trading Trick That Spits Out Money
In the stock market, the opening price is not as important as the closing price. Knowing this can give you a serious advantage over most other stock traders. I’m going to show you how to pull profits out of this truth like money being spit at you from a broken ATM machine!
Let me jump right into this and teach you this incredibly profitable secret.
The closing price reflects the final consensus of value for the day. When people get off work, this is the price they look at: When they print their daily charts after market close, this is the price they see. The closing price is really important when it comes to the futures market: The settlement of trading accounts in the futures market depends on the closing price.
Institutional and professional traders will trade throughout the day. At market open, they take advantage of opening prices by fading gaps, they will buy low openings and sell high openings and then they will 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 price reaches a new high and then buy side volume falls, they sell and push the market down. 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 and non-professional traders have very different trading patterns than those of professional and institutional traders: Amateur traders make up the majority of market participants at market open but as the day goes on, they slowly subside. Why? On the west coast, most amateur traders have a day job so they put on a trade in the morning before work and then do not check it again until they get home after work. Even traders on the east coast will put on a position at market open while at work and then check it at the end of the day. At market close, the participants who are still trading are mostly professional traders.
If you know this, you have a gigantic advantage! Why? Because it means that closing prices reflect the opinions of professionals. Study almost any stock chart and you will discover how often the opening and closing ticks are at the opposite ends of a candlestick. This tells you that professional and institutional traders are usually on the opposite side of the trade as amateurs are. You want to trade with the professionals, not against them.
If a stock opens and runs up near its day’s high at market open, then falls the rest of the day and closes near its day’s low at market close, you want to close out your position if you are long. This is your first clue that the stock has run up enough to get the attention of professional traders who are fading against your position.
May you make a lot of money in the stock market after reading this article. For more of Lance Jepsen’s free trading tips go to stock market and to learn how to correctly use one of the best money making technical indicators visit stochastic oscillator
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