Each intraday trading setup has its own achievement that works in different ways. Proper use of timing is also a significant factor in breakout trading.
The principle of timing applies to almost all intraday traders, especially to those who are working with price breakout stocks, whether they use any indicators on the technical chart or watch live price action.
Some people say that the first and last hour is enough for buy-sell on the same day. Other traders may have dissimilar understandings, and everyone’s views are respected. But based on personal experience, there are three important times. Let’s understand.
The Power of Timing in Breakout Trading
1. Morning Breakout
09:30 am to 11:00 am (EST) – traders can get a higher chance to win a profitable breakout trade during this period. The importance of stock momentum is at a high level.
Whatever news comes from the closing of the previous trading day till the opening of the next day, it affects more. If it is related to a particular stock, then there will be more volatility in the same stock. Liquidity is also high.
2. Midday Breakout
11:00 am to 2:30 pm – the winning chance remains 50:50 at this time due to inactivity. Volatility is less but at the same time, liquidity also remains less.
Most of the stocks go sideways till the start of the last zone. So, if possible, intraday breakout trading should be avoided during midday time, because it affects the trade taken in.
3. Closing Breakout
02:30 pm to 4:00 pm – the closing time is good for price action traders as a lot of information available on the charts since morning till now.
It becomes easy to spot a technical candlestick pattern or a trendline. There is another advantage as well.
Intraday traders have to empty whatever they have held for the entire day. This results in an increase in volatility and liquidity which provides a new trade opportunity.
Well, after knowing all this, all you need to do is find the right trend and the trend can be easily identified by support and resistance. So, morning and closing time is well-favoured.