We trade the “Opening Price Principle” every day we are in the markets. It has made us money and saved us money. Why share this principle? We share it because we are committed to teaching traders. If you want to know how we would explain and illustrate the “Opening Price Principle” and its use to someone sitting with us at our trading desk, then read this book. Better yet, “work” this book. We only take students who are willing to “do the work.” That philosophy is reflected in this book.
YOU have to do some work. That is the nature of learning and gaining experience and eventually coming to a place of wisdom. We also believe in the “keep It Simple” principle. We use simple language, communicate clearly and focus on the real and very practical constraints every trader faces in today’s market. In short, without sitting beside us watching prices unfold and the “Opening Price Principle” operate in the market, this book is the closest we can bring you to that ultimate learning experience.
SUMMARY OF THE OPENING PRICE PRINCIPLE:
- The opening price is neap the high or low of the day approximately 70% of the time.
- Traders should realize that when a stock or commodity opens, it is also likely the high or the low of the day. Prices then move away from the opening establishing the day’s trading range.
- The most frequently asked question about the opening price is: “How many bars or minutes should I wait before entering a trade?” The answer to this question lies in risk control. No trader “knows” what is going to happen next in the market. No trader “knows” how much profit will be in the next trade. Therefore, the trader must focus on risk. So rephrase that question to: “If I enter here what is my risk?”
- Each trade is a separate entity. Determine the risk on each trade before you place the trade!
- Opportunities exist for substantial profits when stocks and commodities are the most volatile. Trade only the most liquid stocks or commodities. Always and we mean always, control your risk!
- The Chinese characters for opportunity and risk are the same! The context of the sentence determines their interpretation. In the context of trading, the market determines the opportunity and the trader determines the risk. Control the only element of trading you as a trader can control – risk!
Contents:
- PROVE THE OPENING PRICE PRINCIPLE FOR YOURSELF!
- TRADING THE OPENING PRICE PRINCIPLE
- PATTERN RECOGNITION
- PATTERN PRIMER
- ORDER FROM CHAOS – THE FIBONACCI SUMMATION SERIES
- PROPORTIONS OF IMPORTANCE
- RISK MANAGEMENT, PATTERNS AND THE OPENING PRICE PRINCIPLE
- PROFITS. PATTERNS AND THE OPENING PRICE PRINCIPLE
- FINAL THOUGHTS
Opening Price Principle: Best Kept Secret on Wall Street By Larry Pesavento, Peggy MacKay pdf
