| Updated: September 12, 2025Trends from the start of the trading day – basic features
This lesson will cover the following
- What are the chances that a trend from the start may occur?
- What are the basic features of these trends?
What are the chances that a trend from the start may occur?
One of the most prominent types of trend begins at the start of the trading day (a so-called ‘trend from the start day’). However, experts estimate that such trends occur only about 20% of the time. In other words, if a trader goes long above the first bar of the day, or short below it, anticipating the start of a strong trend, the probability of success is low. Conversely, the likelihood of a reversal during the first hour is much higher.
Some experts believe that when the day opens with a huge gap, the probability that the first bar is the daily high or low is about 50%, provided that the bar is a bull- or bear-trend bar with a large body.
The daily high or low is also thought to form within the first five bars about 50% of the time. In roughly 90% of cases, one of these extremes occurs within the opening range, which may last 2-3 hours.
Basic features
Any trend day can develop into a trend from the start day. On such a day, prices establish one extreme within the first bar or first few bars, then trend throughout the session and finally close at, or near, the opposite extreme. The moment a bar breaks above the first bar’s high, the day becomes a ‘trend from the start bull-trend day’. If it breaks below the first bar’s low, it becomes a ‘trend from the start bear-trend day’.
On most days, such an initial breakout is not supported by subsequent price action and a reversal usually follows. However, if the breakout creates a much larger spike, there is a considerable chance that the day will become a strong trend from the start day. Traders should therefore treat it as a strong trend day.
At times, a trading range forms during the first 30 minutes of the session before being broken. Even then, the opening price often remains close to one of the day’s extremes – namely the daily low in an up-trend or the daily high in a down-trend. Such days typically open with a huge gap, after which prices continue to trend in one direction. For instance, a large downside gap can lead to either a ‘bull trend from the start day’ or a ‘bear trend from the start day’. The set-up is considered more reliable when it occurs at a key level, such as a trend channel line (wedge reversal formation).
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A trend from the start of the trading day can be so strong that price action in the same direction continues during the first one or two hours of the next trading day. In such a case, it is usually better to wait and enter in the direction of the trend on pullbacks after the next session opens. These pullbacks can look deep enough to make a trader wonder whether a reversal is under way. In fact, they are often two-legged retracements when viewed on higher time frame charts. Nonetheless, it is more convenient to monitor a single chart (we prefer the 5-minute or 10-minute chart). Very often a set-up appears at the end of each pullback, visible on the 5-minute chart.
As the trend from the start day unfolds, pullbacks can remain very shallow throughout the session. This is known as a ‘small-pullback trend day’. It is considered the strongest type of trend day and, according to experts, occurs only once or twice a month.
Another case with a trend from the start
Sometimes a larger pullback occurs during the first hour of the day, before the trend has started, but a trader should focus only on pullbacks that appear after the trend begins. By simply comparing the size of successive pullbacks, a trader can gauge the trend’s strength. If the pullbacks are very small and each successive pullback is equal to, or smaller than, the first, the day is a strong trend day.
Example
Consider the following scenario. AAPL is in an up-trend and the average daily range is about 16 points. All pullbacks during the day are around 3 points. Naturally, buyers would prefer a larger pullback to go long because it entails less risk. However, no such pullback occurs, so they start opening small positions on the short pullbacks. Employing this strategy throughout the day contributes to the market’s slow upward movement.
Sellers, meanwhile, never have a clear opportunity to go short, so they also enter small positions when acceptable set-ups appear. When price fails to move in their favour, they are forced to cover, effectively creating additional long entries. This extra buying adds further support to the move higher. Momentum traders recognise the up-trend as well and keep entering long positions throughout the day.
The trend persists throughout the session and pullbacks remain small. Because buyers have been entering steadily, they do not need to chase the rally. Since sellers never build large short positions, covering is also muted. What, then, is the conclusion? Even though it is a trend day, the market does not travel many points, so buyers are unable to secure windfall gains.