We all love highly direction markets. Especially a strong momentum drive right from the open.
But not every day is so kind to offer one. Sometimes price gets stuck at the open.
And if we don’t have plans to manage ourselves during this opening chop we risk hitting our session stop before the day really gets underway. Ok… maybe not you… but I know I’ve done it.
There is of course our usual rule – “If two trade attempts fail, consider standing aside. If three fail, it’s a compulsory stand asideâ€.
But there is another option that can help you survive any opening chop, even if you haven’t made any trades.
I posted these via social media on Monday and Tuesday.
Let’s step through this second example.
(The First Principle, for those not familiar with how we assess likely future price movement.)
Please note that I’d make this decision even if I had no trades so far. This decision is nothing to do with the trades. It’s simply recognition of price being stuck in the opening range. And a conscious decision to limit risk exposure until price removes itself from the chop zone.
There are many ways to use an Opening Range. You can use it simply as a bias reference point (long above, short below). You can use it to provide trade opportunity, either through an initial opening range breakout, or through subsequent retests.
Or in this case, simply as a tool to help reduce early-session damage to P&L when the market gets stuck in a bull/bear slugfest at the open.
A tool to help survive any opening chop through (a) quick recognition of the market being stuck in the opening range, and (b) limiting engagement until it’s broken and holding clear.
Happy trading,
Lance Beggs