One of my favorite ways to trade is by fading big, overextended moves in a stock…
Take my Burn Notice Alerts trading strategy, for instance… Every day, I look for stocks that have moved too far in one direction, and are primed to reverse once the market opens the following day.
There are two super important times that are the best to trade each day on Wall Street: the open and the close.
Everything between the first and last hours of trading are really considered amateur hours. Pros trade the open, and pros trade the close…
And the best time to put on a fade trade is right before the close. That’s because by the end of the day, you often get climactic buying and selling because banks and hedge fund traders have to put on their entire position before the market closes that day.
And that gives us an edge to go against them because they’re moving the price over a short period of time, creating a dislocation in the stock — and a huge opportunity for a potential reversal.
So the stock is likely to snap back on the following open, which is crucial when it comes to fade trading.
The best fade trades have the potential for big returns overnight, and I love plays like that… get in, get out and get on to the next opportunity.
Jeff Zananiri
Jeff Zananiri Trading
*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk.
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