Do professionals close the market?

[hissho]

Hi all

Most people have heard of this cliche "amateurs open the market and professionals close the market", which has been interpreted as you should avoid trading during the day until the last 1 or 2 hours...

i very much doubt about it so i'd like to hear your thoughts on this, especially if you are trading for a living.

thanks
hissho

 

[rodney]

Re: professionals close the market?

I have read that in various texts. The only significance I place on that proposition, is that closing prices carry more significance than opening prices, as the smart money has to park some where over night.

Smart (or dumb) traders can only take the market one of two ways - up or down. Your trading plan should have your criteria for entrys and exits on trades. I would therefore disagree, from my perspective at least, as I like to see the days trading range, and it relevence to market sentiment on that stock over my trading horizen.

I typically look at stocks over a 30 to 90 day period to get my bearings and judgements as to where they are going, and if it looks good, find an entry pattern if the risks concerned fit my trading criteria,

Cheers
Rod

 

[theasxgorilla]

Re: professionals close the market?

It's a conspiracy theory isn't it?

I've always pretended that it meant that the professionals have their finger on the pulse of market. When a piece of information starts to circulate they're the first to know. They crunch it and decide what to do. They have until 4 o'clock to decide.

From 4pm until 10am you have international analysts reviewing the same information. And amateurs who were too busy during the day with work. They go home and catch-up on the Internet goss, or the next morning they'll read the latest news in the Fin Review and then they decide.

The pros are one step ahead. They've prepositioned themselves already. A gap in either direction and they're ready for it.

This is completely made up mind you and just my own rationalisation. In the end I always trade what's in front on me on the chart.

 

[Gundini]

Re: professionals close the market?

My take is this:

Our markets open up with regard to what happened in the US Market and its economic news, Oil price and Gold price.

If the US market goes down, most of the time it has a negitive impact on our market, and visa versa when it goes up, although, this is not always the case, but a good guide.

Oil price effects the globe as a whole, higher costs for the consumers, companies, transport costs, major flow through effects.

Gold price reflects instability, and weakness in major currencies, which have a great effect on trade and balances.

The US is the greatest consumer on the planet. When they slow, we slow.

The effects are felt wide and far, the US buys less imports, China exports less, therefore buys less imports of raw materials from Australia and the like. The US causes a global effect! This is why they are important.

Bellow is only my vision of what happens. But this is how I would run it.

Once our markets open on Monday, they trade till lunch. By then, the Superannuation boys are in to drop off the weekly contributions from the punters. They say,

"Boys, dump the lot in the market!"

The big players (Hedge Funds/Instos) then go to lunch knowing how much money they have to invest for the week, and over a big steak, and a couple of beers, work out what to do with the cash, and when. Meanwhile, the lunchboy is punching the buttons. You know the ones, 150K depth on both sides of the Buy/Sell to make sure the stock price doesn't stray to far while the Noah's are slurping on a frosty!

The Noah's stumble back to the office, with their stratergy for the week. This can be from 1.30 PM to 2.30, depending on the day of the week, and whether they want to "pump and dump", invest or trade.

They send the lunchboy off for a feed.

They make their stand! What a powerful bunch they are....

The Noah's move the market. We kid ourselve to the contrary. They converse with their opposition, so as not to catch them unawares. They move in packs. We are mere mortals. You can't fight against the pack, you will surely lose. They know your strengths, and weakness's, but have a job to do. They are focused, and have cash a plenty!

Most of the time you can go for lunch when they go to lunch, and come back in the last 2 hours of trade. You won't miss much in the meanwhile.

I would like to write more, but what I have written may get me banned from this sight. I truely hope not, as I love the ASF, and I have had a great time telling it as I see it.

Cheers

PS: I trade for a living.

 

[bvbfan]

I remember ChartTV did a study on highs and lows for each days
http://pollux.biz/charttv/index.php?disp=arcdir

It might be useful to you and in this discussion

I don't like to buy the open fwiw

 

[nizar]

Yep i agree, professionals close the market and amateurs open it.
The solution?
Buy before the close, this way you avoid the intraday market noise and can keep a tight stop.
Flog it off on the open to the masses.

 

[wayneL]

I avoid the first half hour. A lot of the pros (in the US at least) trade out of hours. The first half hour can whipsaw a lot, but waiting for the close can be an opportunity cost. IMO

 

[hissho]

A lot of the pros (in the US at least) trade out of hours.

Could you shed some more light on that Wayne? any advantages doing that?

thanks
hissho