Today I've invited Douglas Newberry from Investing Systems Research Lab to come and impart some "open" wisdom upon us. The article is a short one with some good chart examples for you to glance over. Please enjoy the article, comment (as always), and visit Investing Systems Research Lab.
Holding overnight can be dangerous and being on the wrong side of the "morning gap" has taken its toll on all of us at one time or another. This is just one of the many reason we like trading from the open.
Trading from the open can be a real adventure, but when you think about it there are really only a couple things that can happen.
Stocks can open flat in which case one must let the market establish a bias for the day. It is always better to wait out the first few minutes in order to let all the overnight orders clear and then we can see what will happen today.