I think we can all agree that the trend is your friend. Trading with the trend (especially combined with PSR - Position, Situational Awareness and Risk Management), almost certainly assures a trader of a 50%+ win rate over a substantial sample size (we recommend 250+ simulated trades before trading with live money).
What if we could take the first hour of trading (NYSE open at 9:30 am EST - 10:30 am EST), draw a box around the high and the low during that hour, and use that as a gauge to go long or short?
Well guess what? We can and do at FNL!
Thanks to one of our fabulous traders, Randy S, who learned this strat from Scott Andrews, an accomplished trader, we now use this First Hour Box to help us with direction, and we can use the box to help us with entries and exits for the rest of the day.
Let’s take a look at a First Hour Box.
We don’t wait until the hour is up to draw our box. As soon as we reach a “higher high” and “lower low,” we start drawing the box. We adjust it (both up and down) as the price action changes throughout that first hour. We “lock it in” at 10:30 am ET.
In this example the price action within the first hour gives us a 10-point range.
We have our high and low price action in our box, so we will be using that to help us determine the direction of our trading.
What is our Trend AFTER Opening Bell?
When price action CLOSES outside of our box to the topside we look to go LONG. When PA CLOSES outside of our box to the downside we look to go SHORT.
The first aspect of our One Hour Box is determining which DIRECTION to trade. This is just a confirmation of what we already know with evaluating a trend of Higher Highs in an Up Trend and Lower Lows in a Down Trend. Stay tuned for Part 2, using First Hour Box on entries and exits in your trades!
By Rob B. and Dean N.