How To Trade The US Stock Market Open - Best Practices

Why you NEED to have a plan?

You can obtain a long-lasting advantage in the market by being aware of several possible outcomes and having a solid understanding of the context around price.  By staying prepared and maintaining discipline and consistency you separate yourself from the majority of traders.  

Entering a trade doesn't take time, preparing and waiting for it should take time.

Marking previous US session's pivots & overnight high lows.

Many times, you'll see the market returning to at least the overnight high or low. The pivots of the US session such as HVN/LVNs, POCs etc, always have more "weight" into them and you'll see the following overnight session of Asia/Europe respecting them.

Study the condition the ON session is in.

Did it begin a trend move overnight or did it consolidate inside US session range?  Are we opening within the value are of last US session or outside? Those are just some questions we're asking as we approach the US open. A bearish open for example could be opening outside the VA of previous session & bellow previous day's lows. We always monitor Asia/EU/US separately.

Analyzing market from higher TF to lower

We always like to start the day by reviewing where the market is sitting on higher timeframes first, such as Monthly->Weekly->Daily and mark possible key areas.

Then we move on lower timeframes such as 4h/1h/30m to mark potential intraday scenarios that we'll be interested in participating for the day.The previous day's high and lows is one of the first thing that will determine "change" in the market so it's always a good thing to look at.

We don't look at them as s/r but as points of reference.  The previous day's week/month levels offer some key trading opportunities many times.

Are we opening with a Gap or not?

One of the key things we are looking every morning is how far the overnight session is from the settle price.If the overnight session is 0.50% to the upside and US session opens there, that's a 0.50% gap and more often than not, the market likes to fill these gaps back towards the settle, around 65% of the time.   Does it always happen? No. It's just a nuance we are dealing with and pay attention to.  

The overnight session has very little volume to lead the market to major movements so a partial or full gap fill is always something to pay attention to, especially inside balance areas.

Make note of economical market releases scheduled for the day.

Understanding some of the key economical releases that happen is possible one of the most important things.  

If its CPI/Rates release day and you don't know about it and have open trades, you shouldn't be executing live trades in the first place.

Risk management is key and you should not be exposing yourself towards unnecessary losses prior to understanding why price moves like it does at these events.Most releases will happen around 8:30am ET before the US open but many major ones on the PM sessions as well.

Pay high attention to these, they can turn the tides over depending their sentiment.

Other  pivots to look at

- Fibonacci levels

- nTPOCs and nVPOCs

- Single prints

- Poor highs/lows

- 50/100/200 Emas

- Anchored vWaps

- HVN/LVN  

Example: If we got price approaching a level of interest which has a naked POC, we've got the vWap around that level and the 200ema as well, there is a pretty good chance that we get a reversal/reaction out of it.  

Stacking multiple data points gives higher probability trades

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