DAY TRADER CLOCK STRATEGY

The Color DayTrader Time Zone Charts

Day Trader Products has a copyrighted charting system that displays the Day Trader Time Zone in Color chart form for great technical reference. These charts are available for nominal licensing fee. These charts are great visual aid for traders and indicate precisely which trading time zone your in without looking elsewhere. Please contact us by email for details.

DAY TRADER TIME ZONES - MONEY IS TIME

The stock and future markets normally make several pauses and/or reversals every day. These market moves and strategic time periods have been known now are available to anybody via daytraderproducts.com's Day Trader Clock

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On a normal trading day the stock market is open for 6 1/2 hours, or 390 minutes. The Day Trader Time Zone Clock features three colors divided into time bands on the clock face, to alert you to strategic time periods during the trading day. Similar to a traffic signal, these colors are red, yellow and green, and are detailed as follows.

RED: This is the most dangerous time of the day to trade. The two Red Trading Periods comprise
a total of 200 of the 390 minutes of the typical trading day (51% of the total market hours) and are as follows: 1. The first Red Trading Time Zone is an approximate 20 minute period from the Market Opening at 9:30 AM EST to 9:50 AM EST. This is often the trickiest trading time period of the day and is based upon the fact that pre-market orders give the market makers an extreme advantage with inside information on the amount of supply and demand for stock prices. In many cases the use of this information creates artificially excessive gap ups and gap downs. In addition, gap ups create shorts and market makers buy back stock to cover shorts at lower prices. Novice buyers may jump in because they perceive buying or selling opportunities at other than real market prices. The real pros win under these circumstances. This is why stocks that gap up or gap down tend to fill the gaps. It typically takes about 20 +/- minutes to fill these pre-market orders. After this period, more realistic or professional prices are likely to occur. Be alert if this period lasts longer before the first Reversal Time Period: it could mean heavy trading activity, hence potential heavy volume. This time period is often a significant time to sell stocks held overnight, because on gap

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ups, prices are frequently the highest of the day during the first twenty minutes after market opening. Wall Street at lunch is the second Red Trading Zone and typically is a three hour period that occurs between about 11:15 AM EST to 11:20 AM EST and 2:15 PM to 2:30 PM EST. It is during this period that price patterns have the lowest consistency of following tradable patterns. Most traders would eliminate about 50% of their bad trades if they would not trade during this period. Bullish stocks often reach their weakest price of the day during this time.

YELLOW: Yellow Reversal Trading Time Zones represent typical and approximate times when

the market pauses or reverses sometime during or near these time frames. These periods account for about 14% of the trading day. There are six Yellow Reversal Trading Time Zones throughout the trading day, which are extremely important to be aware of. Some of these reversals occur very frequently. One way to tell when reversals start is to watch the S&P Futures, the NASDAQ Composite, the TICK and the TRIN. These Yellow Reversals Trading Time Zones are as follows: 1. 9:50 AM EST to 10:10 AM EST. Prices for the S&P Futures and major stocks frequently reverse direction during or near this time period. The basic reason for the reversal is that market price orders have been filled and more realistic prices based on supply and demand commence. Usually, the longer it takes for the first market reversal to occur, the more pre-market orders (and volume) exist. If the market is basically stable, prices typically continue in the reversed direction until the next yellow reversal period. The second yellow reversal period occurs at about 10:25 AM EST to 10:30 AM EST, +/about five minutes. This is a short time span and is often a pause, but can certainly be a full reversal. The weakest of the six reversals typically occurs about 1:25 PM EST to 1:35 PM EST, +/about five minutes. This Yellow Reversal Trading Time Zone is the only reversal period bracketed on both sides by a Red Trading Time Zone due to its occurrence during "Red" Wall Street Lunch Period. This reversal is not as significant since this Red Trading Time Zone is not normally traded by professional traders, due to inconsistent price patterns and lower volume. The last trading hour of the day can be very volatile. Pay very close attention to reversals. The fourth yellow reversal time period is very significant. It occurs at about 3:00 PM EST to 3:10 PM EST, +/- about five minutes, and is the result of the closing of the Bond Market in Chicago and higher volume coming into the market. Do not overlook this potential reversal because it is very frequent and can be very significant. Yellow reversal period number five is also very significant due to its frequency of occurrence. This reversal period is from about 3:25 PM EST to 3:30 PM EST, +/- about five minutes. The last reversal of the day occurs frequently between about 3:40 PM EST to 3:45 PM EST, +/- about five minutes. Part of the reason is that Market Makers and Specialists settle their accounts for the day, traders are exiting positions and/or covering shorts, and an "aftershock" form the 3:30 PM reversal period.

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GREEN: Trading Zones: Green represents time periods that are certainly not necessarily safe,
but are traditional day trading time periods when price patterns follow more consistent patterns, if such a concept is possible. There are six time zones, which, when combined with the Yellow Time Zones actually represent two Green Trading Time Zones, in which most of your most successful trading should occur. You should note that about 35% of the trading day is a green time period, however, the Green and Yellow Trading Time Zones are often combined, and if combined represent about 49% of the better Trading Time Zones. These Green Trading Time Zones are as follows: 1. The first Green Trading Time Zones actually starts during the reversal of the first Yellow Reversal Time Trading Zone, and commences whenever prices reverse during that period. The first Green Trading Time Zone usually ceases before about 11:15 AM EST when Wall Street goes to Lunch and volume dries up. The second Green Trading Time Zone is a period of about one hour and forty five minutes (when combined with the Yellow Reversal Trading Time Zones) and starts at about 2:15 PM to 2:30 PM EST when Wall Street returns from lunch and goes through the end of the

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trading day at 4:00 PM EST. You will find the Day Trader Clock to be an excellent leading indicator. It should be combined with other technical indicators, such as MACD, Money Flow, Stochastics, Relative Strength, Accumulation/Distribution, etc.(See Technical Analysis) Some stocks follow the clock better than others. Your research will be very important. Time spent researching your favorite stocks will be well worth the effort. Observe the charts shown herein and plan your own strategies.

Specific Tips of Trading the Clock:

First, assume that you are trading against market makers that know more than you. Protect your downside and chose high quality stocks that have a basic tendency to follow the Day Trader Clock. To a large extent, some stocks follow the clock better than others. Review many charts and find your cadre of stocks than meet your criteria. We have found that the S&P Futures, AMAT, QCOM,COMPX, COMPQ, CSCO, BRCM, and CMGI follow the clock reasonably well. There will be days when nothing follows the clock. Other days will provide four or five major trading opportunities. With practice, you will develop a feel for what is likely to happen next. Lets say your contemplating AMAT, all charts are always candlestick: The Chart-1 setup includes a two-day, five-minute chart of AMAT; Chart-2 is the same data but for the NASDAQ ($COMPQ). Chart-3 depicts AMAT daily (60-90 days) and Chart-4 is a similar chart for the NASDAQ. Watch the five-minute chart of NASDAQ very closely. To be even more precise, display charts of the S&P Futures. You must have good real time data systems to feed your charts and data. We use several technical indicators and review all of them for confirmations before entering a trade. Remember, the Day Trader Time Zones are approximate times that warn you of a frequently occurring event that is likely to happen. They don't always happen. If we get conflicting technicals vs. the clock, we stay out. When we see a setup that we like, we usually jump in with both feet.

An ideal long setup would be as follows:

1. 2. NASDAQ is having a strong opening and holding or heading north with strong volume, A big opening and gap up in the stock you want to trade, Prices fall from the open with four big five-minute red candlesticks until 9:40 AM, The last red candlestick is narrow so we know the downtrend is starting to subside, A green candlestick appears at 9:40 AM, Money flow went below 20 and is now heading due north, MACD is near the bottom of the chart and the lines are heading north, Stochastics looks similar to MACD, On Balance Volume is increasing, We see heavy accumulation, The price is at the bottom of a Bollinger Band and heading north, And a second green candlestick is just forming.

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The first Red Trading time zone is a time that can sometimes be traded successfully, however, it requires a great deal of experience. When a market maker gaps a price up from the previous day, it tells us that there may be more buyers than sellers. The tendency is to exploit greed beyond any level of fairness and open at an unrealistic high price. The gap up allows stock to be sold by market makers at a price higher than yesterday's close. This is a very profitable time of the day for market makers. If the stock is not extraordinarily strong, the gap up often sets up shorts. In this situation, the price will typically fall in a general downward direction for the first 20-30 minutes until all the pre-opening buyers have been exhausted. The first reversal period concludes this shorting period. Our favorite time of the day to trade commences during the first reversal period. A majority of the time, if the market is not highly volatile, whatever basic direction dominated the price during the first 20-30 minutes after opening, the price will reverse and generally go in the opposite direction for the next 20 to 30 minutes. In a large number of stocks, this can be two to five points. Strong

Stocks that have pulled back on a bullish day will often turn up again. The 10:25 AM reversal can be very irritating. It interrupts a long potential directional move. Sometimes it is a pause and sometimes it is a full reversal. Often times stocks temporarily top out around 10:25 AM and then pull back toward the opening price or last support area before another price move takes place. If you are trading short term, you may want to close your position when it appears on your chart, and consider entering a trade again after the reversal period. If you are trading longer periods, follow good stop loss criteria. When lunch time comes on Wall Street at 11:15, pack up and stop trading during the Red Trading Time Zone. You will improve your trading substantially if you do because price patterns are very inconsistent. Check the market out again about 2:00 PM to 2:15 PM and see if activity starts to pick up. At 3:00 PM, hold onto your hat. The Bond Market just closed and Wall Street often comes alive between 3:00 PM and 3:10 PM. There is a strong tendency to move until the 3:25 PM to 3:30 PM reversal period. If you are short term trader in this period, watch for the reversal. You may want to exit when you see it forming on the charts. The last reversal period starts about 3:40 PM to 3:45 PM. Traders are covering shorts, market makers are balancing portfolios and day traders are exiting positions. Quite often, the last 15 minutes has similar characteristics to the period from 3:10 PM to 3:25 PM. Be very careful. Many other traders want your money.