Index Futures: Trading the Closing Session

Many index futures traders choose to trade the open or the morning session. There are many advantages to doing so, the opening gap and the strategies surrounding it for example. For many years I focused almost exclusively on the open however due to forced a change in my trading routine recently with a change in time zone (spending the summer in New Zealand), I have started to trade the closing session and discovered that it too has numerous advantages...

Daily Pivot Points
I have often said to TWP students to put more emphasis on the pivots that have already shown strength, i.e. they have already held price at that level.  On the open when a daily pivot has just appeared, we have no choice but to put our full faith in that pivot as price tests it for the first time.  By trading the close we can see how price has reacted to pivots already and have more confidence on the strongest levels to trade.

Support & Resistance
Similar to pivot points above yet still deserving of its own category, we can now see the session highs & lows that have formed. We can also see how strong certain levels are and how precise. At TWP we look for multiple touches on the same, precise, flat level to consider it true support or resistance. Only after at least a few hours of trading can these types of levels start to form.

Trends
A good trending day is something we all want to get involved with. At the open we often spend time trying to predict trends. By trading after lunch we have a much clearer picture of where the momentum of the market is headed. Sure, we have missed some of the move but it only strengthens the probabilities of us getting the direction right on our afternoon trades.

TimeZone
For UK based traders who have a day job, the afternoon session is perfect as you can trade right up until 9:15pm. For New Zealand based traders like myself, you can trade in the mornings until the market closes at 10:15am in summer or 8:15am in winter.  Similarly, many traders in different timezones in the world may find the afternoon suits them better.

Right now I am in New York and preparing to do a presentation for TradeStation & the CME Group on this exact topic where I will cover it in greater detail. I am also taking for ICE Futures on trading the Russell 2000 futures contract. In both talks I will be teaching a complete trading strategy & including live examples of recent trades.  If you are in NY or can make it then I would love to see you there. My talks are Tuesday & Wednesday and you can view details here: http://www.moneyshow.com/nyot/wBios.asp?ID=834567W

Happy Trading!

Nick McDonald
Head Trader & Founder
www.tradewithprecision.com