Trading the FTSE off the Open: How to manage your trade

I’ve tweaked my FTSE strategy to allow for reversals off the opening bar before the five minute candle closes…

You may not have read about my FTSE strategy which involves placing a long immediately on the open of the FTSE at 8am with a BIG stop loss and a take profit a third of the size of the stop.

I’ve backtested it over a year — not a massive sample size but enough to make me think this strategy could be a winner.

Here is the strategy…

So today when it triggered it was about six points in profit after about two minutes.

But it was hovering around a zone of resistance at 7523.

After a brief dalliance above this it started to come down so I closed it out for break even.

It proved to be the correct decision because it reversed hard after this.

Because the first five minute candle closed bearish I used a strategy devised by Tom Hougaard of buying below prior bars low on the next candle.

Unfortunately this didn’t work and I was stopped out for MINUS £877.50.

This was a blow because this normally is a really really good strategy.

I went long the DAX at 08:21 GMT.

The DAX was hitting support and also touching the 89EMA.

It looked a strong place to buy.

But the market was weak and I manually closed it minutes later for a seven point loss and MINUS £370.

Not a great start to the morning.

I wanted to buy the gap fill at 16683, but the market looked so weak I didn’t think it would hold.

The FTSE too was filling the gap — it had been a gap up morning.

Again it was that weak I held off.

Breakout — channel — trading range, that was what I had been taught, so I’d wait for a channel to develop on a five minute chart and…