Trading Tip #11: DO NOT TRADE BETWEEN 11 AM - 2 PM EST

If you weren’t aware of this already, I’d like to let you in on a secret: The hours between 11 AM and 2 PM are usually refereed to as “Muppet Hours”. This is when the Muppets/Charles Schwab Traders, waiting for a decisive chart pattern (Double Top, Head-Shoulders, etc…), jump in to try their luck and make enough money to take their Wives/Girlfriends on a Hawaiian Vacation.

There are couple problems with trading between the Hrs of 11 AM - 2 PM:

1) The majority of the move in a stock or stock indices, happens in the 1st Hr of trading.

2) Post financial crisis and QE, the pattern has been, Pump the open and trade flat for the remainder of the day; and every once in a while, VWAP Dump the close.

3) POMO Hours: 10:15 AM - 11 AM

4) The volumes between 11 AM - 2 PM are negligible, as most of the traders are out for lunch.

5) These are usually the times when HFTs and Market Makers will fu*k you up.

This was just a cautionary tale.

Stay tuned for the next trading tip.

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