Day Trading Stocks Between 9:15 AM to 10 AM EST

To get into a lucrative trade quickly after the stock market open we need a method that will get us into a big move whether a trend develops or not. The method that serves both functions is called the Truncated Price Swing Strategy; it’s covered in more detail below.

This strategy is not rule-based. It’s guideline based. In the real world, this setup occurs in different ways. Take time to practice it and learn how to spot the various looks of the setup in a demo account before trading real capital. I prefer using volatile stocks for this  strategy, as they offer the biggest moves in the shortest amount of time. I use examples from volatile stocks, yet the same methods can be adapted to less volatile stocks; the concepts are the same.

Usually the first trade will occur within 15 minutes of the market open, often sooner (especially if using tick charts; discussed later).

In regards to the strategies below, a “consolidation” is when the price moves mostly sideways for at least three minutes (three 1-minute price bars). A “consolidation breakout” then is when the price moves outside the consolidation. “Directional bias” is the direction we want to trade in, based on what the price has done (and is doing now). Always know your directional bias, so you know if you’ll be going long or short.

Here’s how the trade sets up:

  • First, the price must shoot either up or down, showing a clear bias in direction. If the price seesaws back and forth, move on to another stock on your list. We want a sharp price move at or just after the open (sometimes it may take a few minutes). We’ll call this the “initial wave” for future reference.
  • If the stock went up initially from the open price, we only consider a long (buy) if the pullback that follows consolidates above the open price, then breaks that consolidation to the upside.