Being Prepared for the Open

As anyone who has been trading this market recently can tell you there has been a lot of chop and very limited opportunities.  Most days the market goes into a range and the volume falls off.  But even with this lack off opportunities there is still periods of the day where there is money to be made.  As traders we need to be prepared for these money-making opportunities no matter when they become available.   As traders you need to constantly be coming up with trading scenarios, especially coming into the open where the high probability scenario may present itself in seconds.  If you are not ready for these scenarios you will spend the day making excuses instead of looking for the next opportunity. 

There were two stocks today on the open that showed you need to always be prepared even if it’s the first minute of the day they were Western Digital (WDC) and Qualcomm Inc( QCOM) and they moved right on the open.

Coming into the day today I was looking at WDC as a really strong short candidate.  The late day sell off on Tuesday that closed below $40 basically was my reason for this.  The stock had previously been weak and this late day sell off seemed to be continuing this trend.  The stock looked like it was going to open below Tuesday’s low of $39.50 so on the opening bell I knew I needed to be aggressive.  I ended up not getting in until WDC broke the $39 level and bounced up for a second but I was prepared and executed my plan.  I ended up getting out at $38.25 as the stock found a little bit of support in this area but .75 in 4 minutes is a nice way to start the day. 

The other setup you had to be ready for on the open was QCOM.  Now this stock was the strongest stock on my list today because of the previous days price action when it basically went straight up.  Looking at it during the pre-market QCOM looked like it was going to open right near the previous days highs, which were 38.45.  I was patient on this entry and waited for a good spot to manage my risk which ended up being 38.50, with my stop being below the 38.45 level.  I knew there was potential to at least test the 39 level.  Well we ended up doing exactly what i though as QCOM got to 39.16.  I ended up booking half of my position at 38.80 and took the rest off at 38.90 for another quick but very nice trade. 

The rest of the day for me was basically spent looking for opportunities that weren’t there I gave a little bit of money back but ended the day with a very nice PnL.  As traders we don’t need to always be involved but when opportunities present themselves that fit with your trading plan you need to always execute because you don’t know which trades are going to make your day.

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