The Opening Range and the Initial Balance

The Opening Range

Mondays can tell you a lot about how the week is going to trade. Monday sets the Opening Range for the week. Regardless of what trade setup I get on Monday, the Monday high and low Opening Range will help me establish a thesis for the week.

The Initial Balance

Monday sets the Opening Range high and low for the week. Tuesday can extend that range. It could become a false break, range extension, reversal, or perhaps an inside day. In a vast majority of weeks, by the time Monday and Tuesday have traded, the high and low extremes are in place for the week, and one of these will tend to hold, the other may break.

The Day Count

This is why I use the day count. This helps me identify the best possible opportunities and the best setups on any given day. I don't always find the best ones — you can't possibly follow every market.

There are many great trades. Following a basket of 5-10 instruments from different markets (currencies, indexes, gold, oil) usually gives me at least one great trade per day. Sometimes it may just be a high-probability 25-50 pip scalp, other days it could be a great opportunity for a bigger and scalable three-day move of 100-250 pips.

It is critical to protect your psychological capital as well as your financial capital. The best way to do this for me is to stay away from the 50/50 garbage markets.