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Hi there,
Al talks about how market on the Open is likelier to reverse even strong BOs... so probabilities are closer to 50% even for High Probability setups.
At what point do probabilities for e.g. a Strong BO normalise back to 60%+?
Does this happen during the Open session (and is there a signal for this) or do we need to "Look for Change" i.e. wait for the Middle session for these probabilities to be normalised (and therefore the entire Open session has probabilities closer to 50% for all setups)?
Thanks
Noah
Bump
Hi,
a closer look at previous days PA the H L and C as well as GXH and GXL should help you with that as most of the time the probabilities are context-dependent and some patterns are spread over two days due to the session break. The open works like a reset as well, as there might have been some factors outside the market hours which might lead the market participants to change their market view and therefor to take action at the open of the next session like the FOMC events and the day after it.
Brad often includes a disclaimer in the daily blog:
The open will probably have a lot of trading range price action. This means that most traders should use caution and consider waiting for 6-12 bars unless they are able to make quick decisions.
I tend to use his 12 bars as a reference point for lack of anything better. I'd be curious to know how he came to that number?
On a related note: He also mentions that if the 8:30 Globex bar is a news bar that prints a large Doji, the RTH open is essentially in BOM of that bar. I only mention that because in most cases BPA seems to discount Globex price action.
I only mention that because in most cases BPA seems to discount Globex price action.
This should be due to the traded volume. Just take a look when there is no news event and which volume the M5 bars on GX (ETH) compared to RTH bars have. There is a huge difference what might be the reason for his statement.
Thanks for this, I guess it's down to:
1. If we open with a TTR, it means market is agreed on price. Bars will overlap, reverse prior bars, have tails... so it's BOM and 50:50
2. If we open with a Gap and/or a BO, then market isn't agreed on price, and 50% of Opening BOs will reverse as market searches for fair price... and this might include BO / Failed BO of Yesterday's H/Ls.
?
Hey guys, I hope my input helps you guys.
Brad says that he trades after the first 6-12 bars because they are the 30min mark and 1hr mark after the market opens in 5min timeframe.
In the video 48E Al says that the 7th bar has a 50% chance of already making the high and the low, the 12th bar(end of 1hr) has a 70% chance that the high or low has already been made.
About probabilities on the open:
market is 50-50 on the open and is much better to wait 12 bars to put the first trade on. But, I personally think that the probability goes back to normal after the first 18 bars(90min) of the day.
I only start committing to a trade after the first 90min(like lookin to scale in and make money)
Hope it helps
Some good information above. Here is the thing - the open. On the open there has been a period of time where larger volume trading hasn't occurred just yet, so there is a "time for normalization" and balancing. Additionally, at 10 am there often is a report, some being more important than others, that can act as a "wall of information" which prevents further progress and is a common market "turning point".
These are features of the open. After the rebalancing on the open, the market then functions a little bit more "confidently" because sharp "information changes" are less likely. Noted, in a Trump as president market, "new information" can appear at any time.
