Opening Hour Behavior

Opening Hour Behavior Intraday Trading

Market Direction and Reaction in Indian Markets

Every intraday trader needs to understand the market Opening Hour Behavior and Direction for Intraday trading. Once you understand the behavior of the markets not only the opening but also throughout the day, a trader is able to take trades effectively.

Through Opening Hour Behavior and analysis of markets, A trader will be able to understand what possibly will be the day's trend when to trade, when to sit idle and when to exit a trade. This is most important for intraday traders as they might have experienced their trades being idle for long hours or move in the reverse direction to trigger their stop-loss orders and comes back to their original price or move to their target price. This problem can be addressed if you know when to be in the trade and when not to be in the trade. 

Opening Hour Behavior and Analysis of Indian Markets for Intraday trading

Trading in Indian markets starts at 9.15 am and closes at 3.30pm IST. So each trader has its own strategy and rules of trading depending on their trading experience and expertise. Some trade at the opening, some trade after thirty minutes, some trade later before the start of European markets, some after the European markets open, and some trade at closing hour. 

Before going for the best intraday trading time let us analyze the market behavior and the opportunity by tracking the movements depending upon the market sentiments, news, views, etc.

Daily Market Reaction and Analysis:

 Markets always absorb all the news, fundamental, technical, market-related ratings, data, economy, political statements, politics, long term and short term technical indicators, currency movements, employment-related data, company-related data, international markets behavior, investor sentiments, and expectations, and many more which are all factored in for the closing price including expectations of the next day’s move by tracking the charts. Suppose the markets expect a bullish move the next day, the big boy's investors, the professional traders, institutions all gear up for an up-move which is factored in at closing, and technical indicators point towards a positive open.

Between closing and opening of the market, if any unexpected news which is not factored in comes up, that needs to be factored in after the market opens.

So when the news is in sync with the market expectation the trend continues, opens on a positive note, and continues moving towards resistance levels, else the trend changes as per the new conditions.

Opening Hour Behavior and Trading Opportunity:

If the trend is in continuation of the previous day’s trend, bull traders get in and buy again pushing for a new high or up to the next resistance level. Those who have shorted and the bears try to sell the highs and try to pull back towards the closing or support levels making a low. If the price comes back to support levels the bulls re-enter at lower prices and push the price higher towards the resistance levels so the fight continues if the bulls are strong and able to keep the price above the open with volumes then a bullish candle is formed.

In the above context, traders have many opportunities some examples of making profit trades

Trader A: Buys at the opening say time T1 and closes at resistance or a high making a profit at time T2

Trader B: Sells at the high at time T2 waits till it reaches support or a low and exits making a profit at time T3.

Trader C: Buys at supports or lows say at time T3 and exits at resistance or higher prices making a profit at time T4.

Trader D: waits till it gives a good entry point when it breaks the high at time T5 and exits at a new high at time T6 to make a profit.

So each trader has his own trading strategy of playing the market and is right in his own way.
In the above scenario, the traders doing it in the opposites lose thus making a loss. In the above examples if Trader A buys at T2 he is a loser similarly Trader B selling at T3 will be a loser, Trader C selling at T3 or Trader D selling at T5 will be a loser. So in all the above scenarios timing and time frame is important as you notice it if you hold on for more time you may be under loss because of the market price fluctuations and hence a stop loss is a must for any trade.

In conclusion, the timing and waiting for the right opportunity and exiting the trade at the right time will give you the profits and random entry without noticing the market price actions will eventually become a loss trade. If you know the market well there are multiple opportunities.