Time and Price

What is the most important factor in regards to price? Time. Why does time place such a significant role in price? Participation. What do I mean by participation? Those entities that heavily participate in the market at certain times. Who are the entities? It doesn’t fucking matter, but just know, they have a lot more money than you and I, and our job is to identify when they participate and hop on the train with them. So how can I identify these guys and and ride with them? You can stare at a fucking screen for 3 years straight like my dumbass or you can read the rest of this article. Lets start with a yearly time frame. Identify what happens at certain times of the year and annotate them, or have them for reference when you trade.

Do you know what price is doing this time of year?

The chart above takes 30 years of data and condenses it into a single graph which will give you a good idea of what price is likely to do at any time of year. This alone is extremely powerful. You can easily identify bullish/Flat/Bearish areas. Summer tends to be choppy due to low volume. Winter tends to be bullish. Ok, so what else can I add to this? I’m glad you asked. Go back to your charts and study what happens around quarterly option/future expiration.

Price Movement Events

What do you notice around these days? There is a huge drop followed by a rally. So now we have seasonality and quarterly expiration data. Our next step is to drill down even further. Now we can start looking at weekly data. If you’ve traded long enough you know Tues or Wednesday usually put in the high or low of the week. Mondays and Fridays tend to be chop days, unless its FOMC or quarterly or monthly expiration. So how can we use this data? Well, first we can look at our seasonality chart and determine whether we are bullish or bearish, make an assumption on price direction, and get prepared to put on a position on Tuesday or potentially Wednesday for a weekly swing trade. How do wee know when to put on the trade? We must drill down even further into when to attack within the 24 hour day. Start to study Asia, Europe and US market action and what occurs during those market hours. Asia=0800-0400/Europe 0400-1230/US 0930 - 1600. We want to determine what gives us the best bang for our buck. Find what works for you and focus on it. Personally, I have found that the best time to target a trade for myself has been the US open. That is when the most volume comes into the market. The open will consist of manipulation to shake out weak hands followed by the weekly market direction. This should give you a starting point if you are new and give you topics to research. In my next post I will delve into other key factors to consider when entering your weekly position.