On my latest StockTwits TV show, SMB University, I was asked about trading right on the Open.  Often new traders struggle with this time period for two reasons:

a) they miscalculate their downside risk before entering the trade

b) they do not have a playbook with trades that work for the open.

Well let’s try and correct some of (b) with this blog.  I will introduce an Opening Range Play.  Perhaps you can make this trading pattern your own.

On Thursday there was this from the financial paper of record, the Wall Street Journal:

Monsanto Co. cut its earnings forecast Thursday for the second time in seven weeks, as it slashed prices of its Roundup herbicide, largely putting to pasture the onetime cash cow that funded the company’s push into crop biotechnology in the 1990s.

MON gapped down Thursday AM about four points from 52.50ish to 48.50ish.  MON ended the session near 50.   A quick peak at the intraday chart on this Thursday shows MON in a nice uptrend.

On Friday MON opened above 50, first moved higher to 50.70ish and then started a nice range between 50.20 and 50.35.   During our Tradecast after the Close today one of our traders mentioned, “There was a huge seller at 50.35.”  MON broke above this range.  As intraday traders we get long.  We are long above the opening range.

If you missed this move, there was more opportunity.  MON traded in another range between 50.40 and 50.60.  50.40 held the bid cleanly.  There was never any 39c, 38c, 37c, 33c, nonsense shakeout.  There was 50.40 on the bid, holding, and not dropping.  Beautiful.  We have MON above the opening range and an impressive held bid at 40c, so buy more.

For those who struggle in the first 15 minutes of trading this is one play to consider.  Perhaps you can make this trading pattern your own.  If you have any questions please do not hesitate to contact me at [email protected], or post a comment on this blog.