Trend day arises when there is an expansion of a day range of trade and opening and closing are about opposite extrema. The first half an hour of trade often includes less than 10 % of a general day range; usually there is very small intra-day correction. As a rule, price action grasps an impulse of last hour and a trend is accelerated.

The day trend can occur both in the same and in an opposite direction to a prevailing trend on a day schedule. A critical point is the increased spread between a maximum and a minimum of a day range which offers trading possibility to make the big profit for short enough time.

Classical trend day is a big gap that at opening has created vacuum on the party of purchasing. The market has opened on one extremum and was closed on other. Pay attention to how it did higher maxima and higher minima all the day long. Also, in the end of day mobility other characteristic of trend day has increased.

Traders should understand characteristics of trend day even if them interests only intra-day scalping. The trader expecting trend day should change strategy from trade from support and resistance levels and tracing of resale and rebuy conditions on indicators to use of methodology of trade on breaks and to be flexible enough, to buy above or to sell below. The trader taken by surprise will often suffer the big losses in trend day as he will try to sell above or buy below prematurely. As there are a few intra-day recoveries small losses can easily get out of hand. The worst problems arise at attempt to average losing positions in trend days.

Fortunately, there is a possibility to specify certain conditions which often precede trend days. As it can be easily made at night when the markets are closed, the trader can adjust the trading plan next day and will be ready to place the warrants on opening of positions and corresponding stop warrants at acceptable levels.

Principle of reducing/expansion of a range

Some types of conditions lead by trend days, but most of all involve some type of reducing of variability or a day range. When the market is consolidated, buyers and sellers reach an equilibrium price level and the trading range aspire to be narrowed. When the new information arrives on the market, the market moves from this point of balance and tries to find new price or price area. Both buyers, and sellers will be caught “on the wrong party and, finally, are forced to cover worsening existing misbalance of supply and demand.

In turn, the increase in a price impulse involves new market participants and soon enough the vicious circle becomes isolated. The accelerated rise in prices stimulates new purchasing which in turn push the prices still above. Instead of to the price to move back as in case of trade in a range, “positive feedback” is created – the condition in which nobody can predict as will far go the price. The market receives a strong unilateral impulse, instead of shakes back and forth.

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