If there is an overall bullish sentiment amongst investors due to the trend, news or earnings, then there will be a flood of buy orders to be filled at the open. Most of the orders will be filled in the call auction of the pre open. There may be enough orders that flow into the regular trading session to cause price to temporarily rise. What you have to remember though is that the gap up is caused because of the need to find sellers to absorb all of the buy orders. Once they have, then you will typically see a reversal of price anywhere between five to fifteen minutes after the market opens. That reversal can be short lived as the overall sentiment of the day will take price in the direction of the dominant trend. Traders should learn that this correction offers an excellent opportunity for the smart trader to get a better entry price for their trade. Watching the volumne and charts and anticipating this is very important.
Professional Techniques For Short-Term Currency Trading
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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