A seasoned businessman who invested in CFD trading is surely aware of the versatility of the said instrument. Thus, it is not shocking to note that CFDs can be used as an instrument for trading stocks. Speaking about stocks, did you know that the famous floor bells have a very colorful history that can be traced back to the 1870s when continuous trading became famous. Historians say that the very first bell that was used in the New York stock exchange was originally a Chinese gong but as time went on, the gong was later changed to brass bell. Even up to this moment, bell ringing ceremonies are still important not just for trading but for social purposes as well. Bell ringing is important for traders because hearing the sound signifies the beginning and end of trading. Moreover, bell ringing ceremonies are also socially significant because some of the famous markets such as the New York Stock Exchange invite prominent people to ring the market bell on special occasions. Today, we shall use the ringing of stock bells as an avenue to help you decide for the favorable times to trade.
Market Behaviour After the Opening Bell
We have mentioned that the ringing of the opening bell signals the start of a trading session. During these moments, it is expected that the market will be at the peak of transaction in the first hour of trading because during these times, the day traders wish to take advantage of the high volume of trades. Most day traders have observed that the 1st 10 minutes of trading bring stocks to fluctuate. In the next 20 minutes, the market behaviour begins to move in reverse until a breaking news changes the trend. This flow continues up until it’s almost time for the closing bell.
2 Suggested Strategies when the Market is Open
1.Gap Riding via Price Action
Price action strategy is a method where a trader uses his skills in the analysis of basic price movements to determine when to get in or out of the market. What makes this strategy unique is the fact that the trader is focused on the relation of a security’s current price to its past prices as opposed to values derived from that price history.
This past history includes swing highs and swing lows, trend lines, and support and resistance levels.
- Fade the Opening Gap
An opening gap is defined as an area on the trading chart that indicates a sharp up or down, with little or no trading in between the data. If this happens, a trader could see a gap in the normal rate pattern of the commodity. Once the gaps are spotted, trading coaches suggest buying stocks after the gap down. Moreover, short trades should be processed in the market after observing a minor gap up. When doing this strategy, please be reminded to set your stop loss to about 50% of the gap.
The closing bell indicates the end of a trading session. During this time, some traders may interpret the bell as a signal that the moment to trade for higher profits has ended. Others however believe that the closing bell signifies another opportunity to prepare for another session via news gathering, strategic planning or after hours trading.
After Hours Trading
After-hours trading is a time frame that covers the moments when a market is closed up to the few hours before the opening bell rings. During these times, a trader can sell and secure securities just like regular trading sessions. Despite its dangers in terms of liquidity, spreads, volatilities and tight competition. Traders still opt to trade during these moments because of the advantages on fresh information, pricing and convenience.
Today’s post has taught us that the ringing of the bell does not just signify the typical opening and closing of a trading session. It also taught us that CFD trading transactions can be done both during and after trading hours. Moreover, we should also take note that despite the promising opportunities brought by each trading time that we prefer, one should never underestimate the risks that go with each choice.