c10 JWBT016-Busby October 9, 2008 11:3 Printer: TBD
120 STRATEGIES TO WIN
the 1980s, I could not have imagined that today I would have the ca-
pability to trade a German index from my home in Mobile, Alabama,
at 2:00AM. I am living proof that after-hours markets expand opportu-
nities.
Second, information gained from after-hours markets is valuable and
can improve one’s trading during the regular day’s session. Before I place
my first trade in the morning, I know the world’s sentiment. I check the
prices on major indexes across Asia and Europe. During their most recent
trading sessions, were traders around the world bullish or bearish? Once
I gain that information, I am then able to use it to make more enlightened
trading decisions when the pits in New York and Chicago open for busi-
ness. If the world is bearish, I want to think long and hard before taking on
a long position.
Finally, after-hours markets are great places to hedge positions or
trade after-hours news. For example, if a major world event occurs after
the trading pits are closed, an after-hours trader can log in to his platform
and buy or sell as needed to hedge his portfolio. Or he can trade to take ad-
vantage of the news. If the news is viewed by the world to be significantly
positive, the markets will respond and soar upward. After-hours traders
can profit from the move. Or, if bad news is aired, the effects of the dis-
aster will be reflected in the futures after-hours markets. Those who know
how to maximize their trading can go short and make money. However, one
must be prepared in advance. Once a market-moving event occurs, it is too
late to open an account or learn the ropes. Be prepared to react before a
crisis or exceptional event occurs.Characteristics of Night Markets
If you have never traded after hours, be sure to observe the market be-
fore putting any money at risk. Prices during the night session may move
at a snail’s pace. There have been times when I have placed my orders in
the early afternoon, gone to dinner, watched a little television, and then
stepped to my computer to check on my trade. At that time I learned that
the order was not yet filled because prices had not moved. On other oc-
casions, prices might be very active. For example, during earnings season,
a blue-chip company may energize markets or some other event may get
prices hopping.
On slow-moving nights, traders may have the feeling that there is re-
duced risk. That is not true. It is always possible to lose money when trad-
ing. Always consider risk, trade when the odds for success are on your side,
and manage your money.