There are several keys to trading an early morning breakout. First, you need to wait for a trading range to develop between 9:30 and 9:50 in the morning. This is the crucial “after the bell” period where most activity is seen. Second, you need to buy or short the trend between 9:50 and 10:10, after you see the range develop. Third, you need to have a clear price target in mind and a stop loss order in place in case your target isn’t reached.
Forex and stock traders are looking for the consistently wrong investor, trader and take the opposite position. This will obviously lead to winning trades for them. All traders have read trading books that point out that increasing volume is good for the continuation of the trend. Many new stock traders will try and fight the trend.
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