The Best Time Of The Day For Price Action Trading

Is there an ideal time of the day to be a day trader?  The answer to this question might surprise you, so continue reading if you would like to learn more about the best time of the day for price action trading?  If you do some research on this question, you will quickly find that there is a wide range of opinions on what is the best time of the day for day trading any of the most popular markets.  While price action trading works in any market or time frame, we prefer to use it to day trade the futures indexes, and over time we have migrated to trading mostly the mini S&P or ES.  There are many reasons why we prefer to stick to the ES, but we won’t address that in this article, as we want to concentrate on the best times of the day for trading the ES as our subject today.

As we already hinted, there is a difference of opinion among most people as to which times of the day are best or easiest for traders, but we also think that a lot of the things that you read that are widely accepted as gospel in day trading is really completely wrong, so be careful of what you put into practice when you read information on the Internet, particularly things you read or learn in trading forums and even in some trading books written by supposed trading gurus.  Until you can learn to read a price chart and become a consistently profitable day trader on a day to day basis, it is really hard to know and understand what is important and what is not, so you simply believe or trust that much of what you are reading is factual, when in fact, it is completely wrong or irrelevant.

When you read or hear about the same trading ideas and strategies over and over, they tend to become widely accepted among all traders, even when many of them are completely incorrect.  I get certain questions from the public on a recurring basis, and it’s amazing how adamant some of these traders are as to how important certain aspects are to profitable trading, yet they are concepts or ideas that I know for certain to be completely irrelevant or even wrong!  When it comes to which times of the day are the best or easiest to day trade, the answers here can easily fall into that same trap.  In my opinion, it’s a personal preference based on your trading ability and style.  If you can not read a price chart or if you do not have some basic understanding of what prices are doing, then any time of the day will be similar for you, and you will struggle and lose money in the end.

On the other hand, if you have some basic understanding of prices and you can read the price action if it’s not moving too fast or too volatile, then you will do best during slow periods of the day.  If you are very efficient with the price action, then the more volatile and the faster the market, the better you will likely do as far as making money, which is ultimately why we are trading.  If you are trading for any other reason than to make money, then you should stop today unless you enjoy donating your money to other traders.  Hopefully you caught on to our obvious hint at the importance of being able to accurately read a price chart, because in the end, without that ability, you will never make money on a consistent basis as a day trader.  Even if they don’t call it price action trading, those traders that consistently make money each day trading are able to do so because they have a relatively clear understanding of what prices are doing, or else they would be losing money.

Below is an article that we found that does a good job of describing the different times of the day for stocks and the index markets, so we thought we would share a portion of it with you.  Kunal Vakil wrote the following:

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Developing a trading methodology and rigidly following your money management rules represent only part of the struggle in becoming a successful day trader. Equally important as the question of “how” is “when.” You may have very proficient trading systems and be able to follow your rules, but understanding when to place trades can take your game to the next level. As an active trader, you need to be aware of these different time zones as some of them may be more prone to generating legitimate breakouts and breakdowns while others may be more conducive to range-bound trading.

I want to cover the market dynamics that occur during the different segments of the trading session. Remember, make the game come to you; do not chase the game. Most trading systems will work better in either trending or range-bound markets, but not both.

The Opening Bell – 9:30am to 9:50am

Exercise caution during this time frame; it is the most volatile trading period of the day. Unless you are an extremely talented day trader, it is best to stay out of the market and wait for the imbalances created from overnight news or earnings releases to settle down. The extreme nature of the volatility renders many technical indicators useless. In most cases, volume will also be the highest of the day during this time, and price swings will make it very difficult to set appropriate stop-loss orders.

The Morning Reversal- 9:50am to 10:10am

The first reversal zone of the day begins at around 9:50am and lasts for about 20 minutes. Day traders need to pay close attention to this time frame; many traders will put on continuation trades, or buy stocks which set new 30-minute highs and short stocks setting new 30-minute lows. Other traders may look to buy stocks that have had small retracements after a large morning gap and short stocks that have had minor retracements off strong gaps to the downside.  You can read the rest of the original article here.

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What we liked about this article was the fact that the writer does a good job of describing the price action during certain times of the day, so when you get the time, read his original article in full and make note of how he describes normal price action during certain time frames, as that is the best we think anyone can do when trying to tell another trader the best time of the day for price action trading.  We think he has done well at describing the average daily price action during certain periods of the day, and notice we said “average,” because nothing is ever written in stone when it comes to the markets.  If you understand the normal or average periods as discussed by this writer, then you will have a much better understanding of how this will work into your personal trading based solely on your own personality and not someone else’s ideas or preferences which might not be right for you.  What works for you as a trader will ultimately determine the best times for your trading.  When traders are comfortable with what they are doing, they have fewer emotions and make fewer mistakes, and it’s emotional mistakes that normally lead to the biggest losses and fewest winning trades.

If you would like to improve your trading and you have not yet learned how to read a price chart, then you have come to the right place.  If you want to learn more about price action day trading, then you can do that by going to http://priceactiontradingsystem.com/pats-price-action-trading-manual/.

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