“Amateurs buy at open, professionals buy at close”
This is a wisdom that stock market investors should pay attention to. It is a price action that can be observed in the market; it offers plenty of clues about market sentiment at the moment. It fairly tells what stock market professionals are doing. If professionals buy, follow closely; if professionals sell, keep eyes on exit at all times.
Daily price action
Trading days that open high and close higher end on a positive note. Everyone who bought that day is a winner. Trading days that open high close low end on a negative note. Buying did not follow through so there are many losers.
How did the saying ‘amateurs buy at open, professionals buy at close come about”?
It is observed that stock market amateurs rush to buy at open following overnight bullishness in other markets. They are driven by fear of missing out a rally. Professionals on the other hand are more concerned about the risk of carrying a position forward. They therefore buy (commit to a position) at or near to close.
Black days driven by professional selling; ominous sign
Trading days that open high close low in an uptrend are worrying. It is a sign that professionals are behind selling, not buying.
Combined with topping price action or price approaching resistance, signs from the Straits Times Index suggests that 1) stock market professionals are selling on days when price is good, 2) amateurs are left holding the bag and 3) if price turns down, the market could be full of weak players.
Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.
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