The Last-Hour Trading Techniques by Ashwani Gujral
This trading strategy can be used to enter the market in the last hour of the trading day and exit in the first hour of the next.
They say 95% of daytraders lose money, but that’s not the case anymore if you are operating in the right time zone of the day and in the right stocks. In fact, it is possible to daytrade the markets with 80% accuracy. The overall volatility of markets seems to be increasing every year, so the more time spent in markets leads to greater risks being taken. It has now become possible to slice the trading day into the most active and profitable time periods and least profitable and active time periods.
The AG last-hour technique is a “Buy today, sell tomorrow” or “Sell today, buy tomorrow” daytrading strategy. This can be used for entry in the last hour of the trading day and exiting in the first hour of the next trading day.
I have conducted real-time backtesting of the strategy in the last year. The strategy has a documented backtesting accuracy within given parameters of about 80% odds of getting 2% or better on a daily basis. The beauty of this strategy is that you always have a play for the day, and you do not have to watch a quote screen all day.
WHAT'S SO SPECIAL ABOUT IT?
The first and last hours of any trading day are the most active in terms of price and volume. The activity in the last hour happens because most large institutions operate in the post–lunch session. There are also up and down swings during the day, with the market revealing its hand only in the final hour.
The first hour of a trading day is also interesting and active but for a different reason, in that stocks that have closed strong or weak in the previous session tend to open in that direction as well. This happens because technical analysts, newsletter sellers, and retail traders look at daily charts for breakouts. Thus, a strategy can be created where you buy and/or sell with the big institutions and book profits when the rest of the market tries to get on the bandwagon.
The Indian markets open at 9:15 am and close at 3:30 pm local time. So the techniques described here are from that point of view, where the first hour is 9:15–10:15 am and the last hour is 2:30–3:30 pm. These principles can be applied across all markets and time zones.