It started out as a friendly card game, but now the stakes have risen beyond your wildest dreams. The cards have been dealt and your bankroll is sitting in the middle of the table.
It’s time to call, raise or fold and the table awaits your move.
With every fiber of focus, you casually glance around the table, desperately looking for a hint or tell. An averted gaze, hands that are fidgeting… anything to give you a sense of what your opponents are sitting on.
Each day in the first minute of trading, the market tips its hand, essentially telling you what cards to play. It’s the opening range, and if you blink you’ll miss an easy pot to start your trading day.
A market ‘tell’ to keep an eye on
From the moment you take your place at the table, you’re being sized up. The pros will have done their homework, knowing everything there is to know about your playing style.
Mannerisms, tendencies and weaknesses have all been cataloged. With every hand, the cracks in your game are filed away for future exploitation.
At the start of each trading session, you only need to watch for the market to tip its hand. It does this in the form of the Opening Range: the price range established in the first minute of trading.
For those in the know, this is monitored closely as a zone that’s respected for support, resistance and break-out opportunities.
All you need to take advantage of this tell is a watchful eye and a quick hand to mark these price levels.
Uncovering the market’s opening hand
World Series of Poker winner Joe McKeehen needed just 12 hands of heads-up poker to seal his victory and net $7.7 million. With your chart set to 15 seconds at the start of trading, you only need 4 candles to put price into the corner you’re looking for.
With remarkable reliability, the Opening Range will establish a zone for range extension for traders looking for a breakout. The high is also used as an area of resistance and the low is leaned on for support – until it’s broken.
See how this plays out with our ES chart, set at 15 seconds. Over the course of 4 quick candles’ price:
- Stakes out a high and a low – in this case, inside 45 seconds
- Extending these levels out over the next 28 or so minutes, you can see how these levels are respected
If you’re not watching, you’ll miss this — and along with the Opening Range, an opportunity for an easy trade.
Taking early wins from easy pots
Once a tell is spotted and verified, the victim becomes easy prey. Experienced players will slowly reel the the unwitting novice into a trap — even giving away hands along the way. Once the pot is big enough, they make their move, relieving the helpless amateur of their chips.
With the Opening Range, you can only play it cool for so long. Usually, you need to act in the first 10 minutes or so to take advantage of this market tell. With our ES example, inside the first 15 minutes – after the first minute of trading – there are fade opportunities presented along the way.
Depending on how aggressive you’d like to be, in this instance you could scalp your way to 4-5 easy wins. A great way to start your day.
Acting fast before the moment passes
Sitting at a poker table with pros, you can expect to play between 45 and 60 hands an hour. That’s right around a minute or less to size everything up and make your move.
If you’re skeptical about making a move in the early minutes of trading, based on one minute of data – keep in mind the following:
- Volume: Unlike after-hours trading, the volume is there to support price action and levels. The build-up to open, and the volume that steps in, should give you the confirmation you’re looking for when eyeing an entry.
- Window: You’re not using this data for the entire day, or even the first hour. This strategy is limited to the first ten, thirty minutes (max) of trading. After that, you’re likely to see a breakout or fluctuation that breaks the range.
Regardless of your appetite for aggressive moves early in the day, plot the opening range and just see how price responds. You’ll find that you’ve been missing out on quick-hit entry opportunities.
Playing the opening minutes like a pro
Mike Caro, who authored ‘The Body Language of Poker’ points out: “A player gains an advantage if he observes and understands the meaning of another player’s tell, particularly if the tell is unconscious and reliable.”
Fortunately, the market’s tell in the first minute of trading is both unconscious and reliable. Prepare to start your trading day by watching the high and low established in the first minute.
Watch for price to revisit these levels of support and/or resistance. When they’re broken, make your move for a breakout. When they’re respected, play the fade. Keep in mind that you’ll have a narrow window of about 10 minutes to make your read, play your hand and exit.
As you’re collecting your chips from your first win, try not to gloat while others scramble to regroup.