Im learning new things....

Seeing that we are near the top, I am going to hold off on making a call until I see which way the market is going tomorrow.

I'm starting to like this: I figured out a new thing for the market. If the premarket is down 15 min before open, chances are after the morning fade gap (at 9:30 Central, 10:30 NY time) the market will broadcast which way it is going to go the rest of the day through movement.

Then I get in with the options that are going to expire at the soonest right at the money, right on the right side of it. For example, the SPY option 107 today expire tomorrow. It went a little north of that to 108.75 so the profit was locked in as the option price was following the actual stock price as there was no time, so that worked to my advantage.
So now when the charts are showing top or bottom, I will place a contrarian bet. But day to day I figure I can glean 10-30 percent per day following closely what the market does right after the morning gap fade.

Morning Gap: Prices stack up from the previous night and before open from Traders watching the world markets and the Premarkets. Orders pile up into a big pile before the Market Maker can execute them at open at 8:30 (Central Chicago Time). When the market finally does open, it takes the Market Maker about 30 minutes to fire all those orders off that stacked up before open. While he is executing that glut of orders that were stacked up the market that he is trading reacts to it and will spike or drop accordingly. After this glut is done being executed, the market will typically change directions to the true direction that it wants to go to for the day based on trader sentiment, technicals or fundimentals/market events
So This is when the market opens and spikes up or down for about a half hour, then reverses and goes the other way and does whatever it does for the rest of the day.

Fading the Gap: Using the above information some traders will watch the open. If they see that the stock/ETF in question spikes for the first 30 minutes, they will buy a call or an option at the money right at about 30-35 minutes after the opening bell with an option that is liquid and will expire as soon as possible for maximum volatility and therefore profit. When the market then begins to swing the otherway as the gap fades, they then 15-30 minutes later exit thier option for profit.

So I can either fade the gap or wait until after the gap fade to see which way the market will likely be going for the rest of the day.

I told you about my friend who knew a guy who did the following: He had 100,000 dollars in a brokerage account. At the beginning of each day, 15 minutes before open he would check the premarkets. If they were up, he would instruct his broker at open to move his entire 100,000 dollars in his selection of blue chip stocks. 10 minutes before the end of every day, he would sell everything and have cash again. He would always be in 100% cash overnight, never hold overnight. On days 15 minutes before open if the premarkets were down and in the red, he would simply do nothing for that day and stay in cash.

By doing this system, this guy made 100% each year. 100,000 grand on his 100,000 grand. And to to it off, he didnt sweat things. As a matter of fact after calling his broker at 8:21 am each morning it was out of sight out of mind. His broker had long standing instructions to sell everything no matter what happened in the market that day each day at 2;50pm if he was in the market that day. So after his morning phone call, he would golf all day, go out to lunch, read the paper.

That is when there were no ETF's. What would be able to make if he used the reverse cube ETFs on days when the premarket was down in the red? What if on those days he used the Bear x3 ETF? What would he make then per year? 2 to 3 times his 100,000? While playing golf?

Very interesting. And something I am discovering as I am slowly moving into this realization. Which is why I am suddenly making 10-30 percent a day. Lets see if I can keep this up and continue to fine tune this.

Tradinginsider