For a hundred + years investors, traders and bankers embraced the financial markets as a bell to bell 9:30 to 4:00 daily regimen in that particular investment capital of their own country.
But today, for the past twenty years, the world has shrunk and there is but one market that operates 24 hours a day everywhere, kind of like one cloud that circles the earth.
The general market leader at any particular time of day is where the daylight shines.
Today's markets generally operate 24 hours save for a few minutes for daily closure and settlement numbers to be derived by the bean counters. But today "open" and "close" are not standard in any sense of the word and "best trading time" varies from market to market, city to city around the globe.
Here is a link of one particular commodity instrument for your viewing confusion:
This time we have chosen Gold and explain this chart's characteristics below:
The screen shot was taken on December 31, 2013 at a time between 5:00 and 6:00 AM Pacific.
It displays 60 minute candles and contains roughly 10 complex indicators. Gold trades at $100 a point and $10 a tick; ten ticks in a point. A good trade in any one of several markets we trade is 30. If we can take 60 ticks out of one trade, we are very happy campers.
You will notice 4 numbers around the chart center. Two are yellow and two are green. Notice how the green is separated from yellow by about 6 hours on two separate days: 30th and 31st. Green represents London open price. Yellow indicates New York open price. There are two separate world pits operating for many of the worlds commodities such as coffee [KC], crude oil [CL] and gold [GC]. London opens at our midnight during standard daylight time. NY pit opens at 6:00 AM. Then London pit [not the Globex, which trades 23+ hours] closes at 8:30 AM.
So, from 6:00 AM to 8:30 AM the two MAJOR world pits are open simultaneously, because the NY pit remains open until 11:00 AM Pacific. It is during that 2.5 hour overlap period every day that the lion's share of volume is transacted in many commodities but not every commodity has the same pit hours. For example, coffee may be a little different. I just mentioned coffee to confuse you, because I like it long right now as it got very oversold last year. But gold and crude pits are open the same hours in both world markets. By the way, a pit is a big round circle with stepped tiers where hordes of real live traders stand around and auction each commodity for the duration of the pit hours. The pit is where the large institutions bring their trades for execution. You and I can trade anytime but the big guys rule and it's best to follow their lead.
One other piece of excellent information is that pit traders are restricted to minimal information, like, all they see is OHLC, open, high, low, close for prior days, which they record on their 3" X 5" pads with their #2 3" pencil. Since, OHLC is all they can get... kind of hard to lug around a notebook or even keep track on a smart phone or tablet, so they just use what their fathers use, so OHLC is the most important numbers to watch for you and me too.
Now that you can possibly imagine a time line and a price line, try to grasp the significance of some of the other indicators. Not seen here, is generally a time clock that counts down each hour.
A trader needs also to know about daily and weekly range. The range is how we estimate how much we can try to take out of each market each day. It is kind of like a fish finder or a duck squawk tool that fisher people and hunters use to bring food to the table.
OK, so, there's a lot of color on this busy chart. But, you did find the 4 numbers I mentioned above didn't you? If not, go back and look again. They are important because they were the prices at certain times of the day. Notice the difference between the two prices on Dec 30 vs the two prices on Dec 31! One is 6 points and the other is roughly 19 points, > triple. Why do we care about what price was at a certain time? Because, price at important times of day get revisited. Revisits are what we use to make money!
So, now I will take you on a journey through the jungle naming this plant and that spider and those snakes. We have indicators that tell us when to enter, how much to risk, how much to expect in return, where to exit and where the varmints hide. We know where each territory boundary lurks. In other words, we know to stay away or tighten stops through very swampy areas. We know exactly the length of our "life" line.
We must know where the market traded yesterday and last week to estimate where it may go today. These indicators tell us all that and some tell us in advance and that is the difference our indicators have over other traders' indicators. That's the reason we are better traders and bring home more bacon than the average bear. And, me? I'm a bear, who likes to bring home the goods, so, I'm much more likely to bite at on short than a long.
Come, watch me trade. I will show how I do it! I will teach you how to do it! I will advise you who else you can learn from and you will become a winner! If you want to win, just come watch me trade and then, do not be afraid to try it yourself. If you can depress a slot machine button, you can trade futures with a lot more success. Stop gambling and start winning!
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