Long Term Secrets To Short-Term Trading

Table 6.3 shows the impact the day of the week has on price changes in these markets. Again, 
traditionalists would argue there should be little if any differences assuming price change is random. What 
we find is that the trading day of the week does indeed produce a bias of future price activity, a bias we can 
turn into profitable trading. 
One of my favorite short-term trading advantages is Trading Day of the Week (TDW). My focus here 
is the price change from the opening of the day to the close as opposed to just close to close. The reason 
should be clear to you, the day for a short-term trader begins on the open and, at least for a day trader, ends 
on the close. 
Table 6.4 shows the results of such a study where the Bonds or S&P 500 were purchased on the open 
and exited on the close each TDW.
Table 6.4 
Open-to-Close Change in Price by Day 

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85 
Random walk theorists should be gasping for their last breath about now. Here's a thumbnail sketch, the 
British Pound rallies off the open 55 percent of the time on Wednesdays and "makes" $18 per trade. 
"Makes" is in quotation marks because after commissions and slippage are taken into consideration not 
much is left, but the pattern sheds light on a market bias we can develop into tradable material. 
Gold has rallied 52 percent of the time off of Tuesday's opening making -$3, while things are not 
much better with Tuesday buys on the Bond market; 47 percent winners and an average of -$3 5 per trade. 
The biggest display of this bias comes from the S&P 500 (Figure 6.1). This is where I first discovered the 
bias and have traded it since 1984. On Mondays, this kingpin of volatility has closed above the opening 57 
percent of the time with an average profit of $109! Bond traders should note the open to close change on 
Mondays has been positive 55 percent of the time with an average gain of $53. 
In case you are wondering about the close-to-close relationship, it is shown in and again the bias or 
advantage to the game becomes apparent. Study them for yourself.