Today's Quote: “Discipline is the bridge between goals and accomplishments” Jim Rohn.

There are several good books out there about trading that should be on every trader’s must read list. If you were forced to choose one and only one, the only possible pick would be “Tools and Tactics for the Master Day Trader”. We are going to run a series of excerpts from the best selling book for the next series of lessons. Now in the words of the master trader himself, Oliver L. Velez…

SECRET #9: 11:15 TO 2:15 EST IS THE WORST POSSIBLE TIME TO TRADE

Many day traders, those active market players who trade numerous times per day, do not realize that there are specific times of the day during which the odds of success drop precipitously. And some of these pockets of time are quite lengthy. One such period is 11:15 to 2:15 EST or so. We often refer to this 3-hour time frame as the midday doldrums, because stocks tend to settle into a very distinct non-directional mode during this time period. It is during this pocket that many day traders get whipped around. False starts and short-lived breakouts proliferate, while fake-outs are a frequent occurrence. In all actuality, it is the first part of the day and the latter part of the day that have always offered day traders the very best trading odds. This is why we tell our traders to play the middle of the day lightly, with the idea of only scalping stocks for small change. While this only applies to active day traders, those who want to instantly eliminate 50 percent or more of their intraday losses can do so by simply sidestepping this unpredictable period. Try it. We dare you.

MASTER TRADING TIP

Master traders recognize that the most lucrative trading opportunities often occur in the first part of the day and the latter part of the day. While they will often still dabble here and there, they are fully aware that the midday doldrums period requires a change in their approach. Why is 11:15 to 2:15 typically dull and uneventful? Because that's when a good part of Wall Street goes to lunch and hands the controls over to their flunkies. Their flunkies have less authority to make big bets or run with things, and it is not until the big guys get back that stocks start to regain some life and direction. Whenever I reveal this fact at my seminars, I invariably get someone who says, "But Oliver, 11:15 to 2:15 EST is a very long lunch. Are you sure it is because they are at lunch?" My answer is always the same. "If you've ever seen a group of market makers, I don't think you'd be asking that question. When we say, "at 2:15 the big guys come back," we mean that literally. Their lunches are big and they are big. Note: This is a generalization that is becoming less true today, but the power traders on Wall Street are notorious for being overweight. Now you know why.