The 10 am Rule: A Millionaire’s Secret for Trading Stocks and Options (2024)

FAQs

What is the 10am rule in the stock market? ›

Some traders follow something called the "10 a.m. rule." The stock market opens for trading at 9:30 a.m., and the time between 9:30 a.m. and 10 a.m. often has significant trading volume. Traders that follow the 10 a.m. rule think a stock's price trajectory is relatively set for the day by the end of that half-hour.

The 10am rule is an investment strategy used by traders to avoid the volatility of the market's opening hour. By waiting until 10am, traders hope to gain a clearer picture of the market's direction, thus making more informed trading decisions.

Rule 1: Always Use a Trading Plan

You need a trading plan because it can assist you with making coherent trading decisions and define the boundaries of your optimal trade.

Avoid options with low liquidity; verify volume at specific strike prices. calls grant the right to buy, while puts grant the right to sell an asset before expiration. Utilise different strategies based on market conditions; explore various options trading approaches.

The closest thing to a hard-and-fast rule is that the first hour and last hour of a trading day are the busiest, offering the most opportunities, while the middle of the day tends to be the calmest and most stable period of most trading days.

It is not a hard and fast rule, but rather a guideline that has been observed by many traders over the years. The logic behind this rule is that if the market has not reversed by 11 am EST, it is less likely to experience a significant trend reversal during the remainder of the trading day.

One of the ways beginners can implement the most profitable trading strategies effectively is by embracing the buy-and-hold strategy. This involves researching companies with solid fundamentals and stable earnings, then holding their stocks for a long time without being swayed by short-term market fluctuations.

If you're looking for a high win rate trading strategy, the Triple RSI Trading System is definitely worth checking out. This system uses three different Relative Strength Index (RSI) indicators to identify potential buy and sell signals in the market.

A simple method which doesn't require any analysis or indicator: Open a trade in the direction of the daily candle any time during the day in your own time zone. Don't put a limit. Put a stoploss equal to the length of the candle.

Never risk more than you can afford to lose. Determine your risk tolerance and stick to it. This ensures that a single losing trade does not wipe out your entire trading capital.

What is the 5-3-1 rule in trading? ›

The 5-3-1 rule in Forex is a trading strategy based on three key principles: choosing five currency pairs to trade, developing three trading strategies, and choosing one time of day to trade.

Understanding the Rule of 90

According to this rule, 90% of novice traders will experience significant losses within their first 90 days of trading, ultimately wiping out 90% of their initial capital.

Options traders can profit by being option buyers or option writers. Options allow for potential profit during volatile times, regardless of which direction the market is moving. This is possible because options can be traded in anticipation of market appreciation or depreciation.

The option sellers stand a greater risk of losses when there is heavy movement in the market. So, if you have sold options, then always try to hedge your position to avoid such losses. For example, if you have sold at the money calls/puts, then try to buy far out of the money calls/puts to hedge your position.

To become successful, options traders must practice discipline. Doing extensive research, identifying opportunities, setting up the right trade, forming and sticking to a strategy, setting up goals, and forming an exit strategy are all part of the discipline.

The New York Stock Exchange rule permitting member firms (brokers) to vote in favor of management ten days or less before the meeting, provided that the member firm mailed proxy material to beneficial owners at least 15 business days before the meeting.

The 10 a.m. rule in stock trading is a strategy suggesting that traders should wait until around 10 a.m. before making significant trading decisions. The rationale behind this rule is to allow the market to stabilize after the initial flurry of activity that follows its opening.

You can do a quick analysis, adjust your trading strategy and get into a good position well after the crowd pulls the trigger on a gap play. Here is how. Let the index/stock trade for the first fifteen minutes and then use the high and low of this “fifteen minute range” as support and resistance levels.

What is 15-15-15 Rule? The rule says to achieve the goal of earning Rs 1 crore, an investor should invest Rs 15,000 monthly through SIP for 15 years, considering a 15% annual return from an equity fund. Consistent adherence to this strategy can lead to significant wealth accumulation.