I'll be the first to admit that the morning session today was a bit, *ahem*, boring. We're in the midst of summer trading where trading volume is often low and ranges are tight. It also doesn't help that price is sticking near All-Time Highs which usually makes the market far more hesitant and indecisive. Those factors made for a very slow start today as price moved in a 4 point range and there really wasn't a quality trade to be found for my trading strategy.
However, there's two lessons that come out of this kind of scenario. First, there's no need to force a trade. Some ranges are going to have excellent trades with a strong positive expectancy but many simply don't offer anything with good momentum or potential to latch onto.
If there's no trades available that fit your plan then the trader's best action is to simply sit on their hands and wait patiently for the next good setup to arrive. It sounds easier in theory than it is in practice, which is why so many traders who search for consistent profitability end up failing through over-trading time after time.
A Slow Start Becomes a Fantastic Run
The second lesson is a big one and something that has made me hundreds of points in the Emini S&P 500 over the years. It's a curious pattern that repeats often and seemingly out of nothing which I'll call the New York Lunch Phenomenon. Those of you who I've worked will no doubt find this very familiar as I talk about it repeatedly during Live Training sessions when the market is struggling to move.
When a morning is exceptionally slow with very tight ranges like today there's very often opportunity right on the horizon. In many ways these tight ranges act like a spring. They get tighter and tighter, and the longer they go on the more explosive the move out of them often is. It's really no different than consolidations on a 1 Minute chart or a Weekly chart... the same patterns repeat and it's just a matter of scale where things are different.
What's unique about the scenario we saw today is TIMING. Go back in your charts over months or even years and look for those very slow and narrow mornings in the US session and you'll see over and over again that they often makes very high momentum breaks early in the New York afternoon (EST).
The New York Lunch Phenomenon
This is a curious thing because under normal conditions in the market this is usually when you can expect things to slow down and become a bit more rangebound after the morning swings. This is because price has often reached some pre-determined targets many traders had in mind, so profits are taken and traders leave their desks for lunch, a few too many drinks, and they probably aren't coming back for the day.
Most of the time this means that most high quality trading opportunities are found in the morning so I tend to focus my efforts there for two or three hours before calling it a day. However, when I see a morning like this unfolding, things change. I very rarely look to trade the US afternoon but when these conditions arise I try to make an exception.
Many traders get bored with a slow session like this and lose focus or even walk away from their screens entirely expecting little to change. I see opportunity.
Well, potential opportunity. There's no such thing as a guarantee in the market and some days that start slow will end slow. Many times the eventual break won't be nearly as strong as it was today. But quite often you get a move like this and missing out because you got "bored" would be a tragedy. There's loads of points to be made for those who were simply patient enough to wait for it!
I only have so much energy and focus for the day so usually after a couple of hours watching a slow morning like this I'll simply throw my chart on a second monitor and glance over at it periodically while doing other things. I'm not too concerned about watching it second by second as it's not necessary. Price will make an obvious move or it won't. If price is looking to break or does so in a high momentum move then it's doubtful I'll miss it even if I'm doing things away from my trading station as long as I check up every ten minutes or so.
That's exactly what I did today. I had a slow session, tried to take a single trade during the morning that I couldn't get a fill on, and then had my enough of directly watching the charts. But knowing the New York Lunch Phenomenon occurs quite often I knew I better keep checking back. I'll be the first to admit that I thought it was unlikely this scenario would play out today but I still knew I had to be prepared just in case it did. I've simply seen this too many times to ignore it.
Cue a brief touch of Yesterday's High around Noon EST, a very high momentum move down a half hour later, and I knew that the opportunity I was waiting for may be coming in mere minutes. From there I got locked in and was able to find a few very nice trades with exceptional reward to risk that turned a "nothing day" into an excellent one!
Most days aren't going to present this kind of opportunity as very slow and tight morning sessions are rare. However, if conditions are right it often makes sense to pay a bit more attention to the US afternoon session than normal because these opportunities are quite common and tend to offer some of the best reward to risk trades in the Emini S&P 500.
Hope this helps your trading and make sure you don't miss out the next time the New York Lunch Phenomenon pops up!