Page 334 - THE MARKET WHISPERER

330 PART 10 - Winning Trades

break (11:30 to 13:30). During this timeframe I do not expect considerable
market movement and therefore I know that if I buy a stock at the breakout,
I should not expect continued strong movement in the breakout direction,
but rather a very short breakout often followed by quick failure. Lack of
trust in the breakout continuity does not mean I am unwilling to take
a profit of 10 to 20 cents and quickly flee before the stock breaking out
changes its mind! Lunch break is also the time when the “one cent traders”
are most active: more on that method later.

• Close of trading
For scalping, this is the best time possible. During the last hour of trade,

and especially during its second half, volumes grow due to end-of-day
institutional fund activity. The problem with this last hour is the lack of
continuity. Continued movement cannot be expected, so developing profit
can’t either, since the day’s trading simply ends. During this timeframe,
reverse formations are usually most successful: for example, a stock that
rose strongly may pull back for part of the high since many investors may
wish to realize part of the profits, lessen risks, and “go to sleep” with fewer
open trades. The reverse occurs with a stock price dropping strongly, when
short sellers that pushed it down all day begin to realize profits (i.e. they
are now buyers) and the stock pulls back part of its drop.

Example of Scalping with DOW