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Day Trading: Ten Reasons For Using Stock Metadata - #7 Of 10

By:   |   Jul 08, 2018   |   Views: 17   |   Comments: 0

Reason 7 for using stock metadata is to learn how the twenty-six 15-minute time periods of the day can be used to time the market.

With reason 7, we're starting to examine one of the more controversial aspects of using metadata. Essentially it has to do with trying to achieve something that most stock market enthusiasts find impossible to do.

That challenge is being able to find a way that recognizes when a stock has traded at its high point or low point so that the appropriate trade can be executed. For day trading, this is also referred to as timing the market.

When looking back to reasons #1 and #2, we notice the segmentation of the normal trading day into twenty-six 15-minute time periods starting with 9:30:00 to 9:44:59 and ending with 15:45:00 to 16:00:00.

This was done to illustrate the fact that statistically speaking, there are some times of the day when a stock, more often than not, will trade at its highest or at its lowest price for the day. And the same could be said about trading patterns related to the volume of shares traded for a stock.

Now that begs the question:

€œWhen day trading, is it possible for somebody to consistently and successfully time the market?

We are neither trying to promote nor dissuade the practice of trying to time the stock market. For those people who employ their concept of market timing for day trading, the information obtained from using stock metadata reports can be of assistance with stock trading strategy development and the decision-making process.

Reason 7 will present some observations about how to take advantage of stock price differences during and between the different 15-minute time periods of the trading day.

For the remainder of this article, there are two reports using stock metadata to which references will be made. They are the:

  • 15-Minute-Metadata-Detail report as illustrated in figure 7a below
    Go to the author's bio at the end of this article for the report description and layout
    Click Here to see this report for the Ford Motor Company

  • 15-Minute-Metadata-Summary report as shown in figure 7b below
    Click Here for a detailed description of the layout and contents for this report
    Click Here to see this report for the Ford Motor Company

As can be seen, both these reports have the same layout, the exception being the summary report only shows the final 15-minute time period for the each day. This is where the summary information for the day is contained.

For those individuals who do day trading of stocks on a frequent and consistent basis, the best way to do so is to employ strategies that deliver positive results. Whatever your trading technique may be, whether its scalping, swing trading, day trading or using some other approach, it must be done with profit in mind while simultaneously mitigating risk. Strategies that don't deliver must be adjusted or abandoned.

Let's start by looking at some basic metadata about the 15-minute time block. Immediately there are various facets of information that stand out as shown in figure 7c.

For example, on 10/1/2009, the gap in prices for Ford shares was:

  • $0.06 from 9:45:00 to 9:44:59 between the Open and Close (C-O)
  • $0.33 from 10:15:00 to 10:29:59 between the High and Low (H-L)
  • $0.08 from 12:00:00 to 12:14:59 between the High and Open (H-O)

So for active traders and depending upon the number of shares exchanged, there are multiple day trading opportunities throughout the day to make money. This can be achieved either by

  • Going long and buying shares, or
  • Taking a short position and selling shares that are not already own

By combining this type of information along with the stock metadata available from reasons #1 and #2 which is found at the beginning of this article, you have another vantage point when considering market timing as a trading strategy. But to do well, a strategy is needed.

Reason #8 and reason #9 will demonstrate some of the different types of trading strategies that need to be considered. Explanations will be using stock metadata found in the 15-Minute-Metadata-Detail report as well as from the 15-minute Metadata Summary report.

The following point cannot be stressed enough. Before actually buying and selling stocks using this type of strategy, always practice using an online virtual stock market account, and/or, only execute your trades on paper.

By adopting this course of action for following the strategy described by reason 7, you won't make you any money. But it's a risk free approach that you can use. And of course, you won't lose any money by using it.

Now that we have reviewed reason 7 for using stock metadata when day trading stocks, we are now ready to continue with reason 8:
Using metadata statistics with more clues on how to time the market for trading long positions


The link to this next reason is included in the author's biography that follows.



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