Hi guys, I wonder if you can help me out clarifying some doubts regarding this particular subject. From your experience, how much importance do you give to after hours trading? Does it bring you a considerable advantage for your daily goals or the inherent risks (lack of liquidity, price volatility,amongst others...) don't justify the means? And last, if you had to choose the the most valuable(s) task from your pre-trading routine, the one(s) that are key to achieve your goals during the regular session,what would be and why? Looking forward for your comments and thanks in advance for taking your time
As for futures not stocks, Almost all my orders are gtc so if they get filled aht that's fine with me. The only advantage is I am sitting there all night and that's my price and I won't budge, so it puts me at an advantage because I don't have to do anything based on anything, so if you want it you have to come to me, and those can be larger moves and spreads to my favor than during rth. I would not want to be sitting with stops aht.
I'd strongly suggest that you don't want to leave resting orders, especially in the after-hours. Just because you want the price you left the order resting at does not mean it's a good price relative to the market. This is what is called getting "picked off".
It isn't there unless I want to get in or out at that price regardless of what the market looks like it is probably going to do. I'm the one doing the picking and I use what looks like a crazy order as bait. If they are going to pay my price I am more than willing to trade it to them. I never trade based on what I think the market is going to do.
I'm not saying you are trying to predict what the market will do, but consider this scenario. SPY is 239.10 bid 239.15 offer. You have a resting order to buy at 239.05. Ten minutes later the liquidity moves to 239.00 bid 239.05 offer. You now get filled at the offer. You just paid the spread of .05 inadvertently and got picked off before you could move to fair value at that time.
If the 230 bid ever gets hit. Then what? Keep moving down? That was my price, I don't care what the filling scenario was, only that I got filled at my price fair or unfair. And often at night it is a crazy spike trade to me. And then back to where it was because nobody else wants to get picked off. But I agree the scenario you described is accurate and something to either benefit from or be aware of.
Agreed, as long as you are aware of it! You are likely trading over much longer time horizons than the people trying to pick off resting orders. And yes, you would likely want to keep updating the bid and hoping to get priority/filled. This is largely the idea of a high frequency market making strategy. If you get filled at 230 on the bid, you would immediately try to post on the offer or maybe even improve the offer. The hard part is knowing whether to cross out if things become toxic.
I would avoid after hours trading. You have the whole day to make your decision, and you should have reached one by the close. Anything other puts you in more risk than necessary. I can recall only one instance where I've benefited from premarket, and it wasn't a big deal. If i have done what i should have done the day before, it would have been a much better and profitable trade. Most after hours trading that I've done has derailed my profits or been downright negative.
Plenty of ways to make and lose $ pre and after. Resting orders is not one of them, unless you want to depend on pure luck. One more scenario might be if you are hedging an option position, so you would be booking a profit by trading the stock . Still , you probably get a 'bad' fill most of the time with a sitting duck order.
I just want to get filled at that price and after hours may be the only time it trades there. Bad fill compared to what? You need to sell and I am the only bid and I'm not budging first in line been there a while, who is probably going to get the bad fill? But I agree, as far as short term sitting there is sitting like a duck.