c02 JWBT016-Busby September 30, 2008 13:33 Printer: TBD
Time Is Money 27bullish or bearish were they? Did Asian traders learn of some good or bad
news with world-reaching effects? If so, their response to that news will be
reflected in the numbers of the Nikkei, Hang Seng, and other exchanges. If
there is a price move of 1 percent or greater in the East, maybe the mood
will travel westward. Perhaps Europe and the United States will join the
consensus and create a wave of buying or selling. If I see a movement form-
ing, I am better able to join it and make money.
Several hours after Asian markets open for business, trading floors in
Europe come alive. At 1:00AMcentral time in the United States, the German
Dax opens. That is, the electronic futures Dax exchange gets going. The
Dax cash exchange does not begin trading for another hour when trading
floors of major exchanges throughout Europe open for business. Traders
begin buying and selling in London, Paris, Geneva, Frankfurt, and all across
the continent. Like traders in the East, they are reflecting their view of
market conditions. If the financial picture looks rosy, at least for a short
time and for their products, they will be bulls. If they see gloom and doom,
fear and wisdom will lead them to sell. Again, this buying and selling action
has taken place while most Americans are snug in their beds.
Asian markets have closed and European ones are winding down when
coffee pots start brewing and eggs scrambling in kitchens across New York
and Chicago. However, by then, it is possible to know a great deal about
world sentiment. Has some major world event or financial information had
an impact on trading to the east of us? Is the world buying or selling in
agreement? Sometimes that is the case. On some days, a buying or selling
spree begins in Asia and travels across the ocean to Europe. The move
gains momentum there and gets even stronger. Then it may continue its
surge and travel to the United States. Wise traders who know what has
happened around the world have an opportunity to take advantage of the
move and use that knowledge and information in their morning trading.
Keeping an eye on action across the Atlantic and Pacific adds insight to my
trading.
When exchanges open in the United States, trading tends to be fast and
furious for an hour or so. Many traders take a peek at prices and jump into
the fray. There is an old saying that amateurs open the markets and pros
close them. The eagerness of thousands of traders to take on positions
shortly after exchanges open creates a surge of activity with generally high
volume and volatility in most markets. Personally, I will consider trading
until around 10:15AMcentral time. Then the volume tends to fall, and activ-
ity slows to a crawl. So I, like apparently thousands of other traders, take a
break from the action. I do other things and enjoy lunch.
However, after getting a little food in their bellies, many traders return
to business. During lunch, they seem to evaluate the morning action. If
they agree with the markets’ morning moves, they accelerate the pace. A