I know most of you go flat each evening, but I'm always holding overnight. It's a bummer when you wake up to gap down or up mornings on your stocks when your betting the opposite direction. Is the NASD ever going to extend its hours to be comparable to the ECN's? It seems that with all the daily gaps that reverse and fill during normal market hours, that someone is playing around with the low volume and manipulating stocks for financial gain (new concept I'm sure). Maybe extending NASD hours won't help volume, but at least most brokerages' stops could be executed across all time periods.
>Is the NASD ever going to extend its >hours to be comparable to the ECN's? I wouldn't hold my breath waiting for it. I read an article in the WSJ that after hours trading has not been considered that much of a success. Most of the casual traders that it was designed to reach after they got home from work have washed out. JB
ddefina, i'm confused by your post, when you say 'extended hours' are you referring to 24 hr trading or trading 8:00 a.m. to 6:30 p.m ? are you unable to trade NASD before 9:30 a.m. ??
The real obstacle to a longer trading day are the market making firms. The ECNs don't have any problems with extended hours trading because they are all automated. But market makers need real people sitting behind those screens, and wall street employees aren't too thrilled with the concept of staying at work 24 hours a day. Extended hours trading as it stands now is OK for the larger cap stocks and I think its going to stay like this for awhile.
I don't quite understand your point. You hold shares overnight and want to avoid gaps (in the wrong direction). And you are suggesting that a longer regular session will prevent this (gaps) ? umm, no it won't. The market will have to close sometime. Even if it was open 24/7, gaps would occur. They have nothing to do with whether the market is open or not.
>They [gaps] have nothing to do with >whether the market is open or not. Frankly, I don't think that a 24/7 market is going to solve what ails ddefina, but the above statement is a bit off the mark if you ask me. Gaps of any significance have almost EVERYTHING to do with a market being closed -- either through market hours or a halt of some sort. For example, the Naz basket of stocks that I trade quite regularly gap 1-4 bucks over night. Without a halt you won't find a gap of more than 25 cents (and almost never that) during market hours. It's the building imbalance with no outlet that causes big gaps and this dramatic imbalance is difficult to create in an open market. Highly illiquid issues will gap during market hours quite often, but generally still not to the extend that they do when the market is closed. Now why ddefina wants to trade an aftermarket strategy that takes advantage of gaps and then do away with the gaps is a bit beyond me. JB
It would of course be great if you could leave a stop order in place overnight, and the market was open and liquid enough for your stop to protect you if the market moved against you. It would change the risk/reward ratio for swing trading if this were true. Stock index futures provide an example. They basically trade 24-hrs on weekdays. Still, at IB, you can't use overnight protective stops. IB says this is because the market is too illiquid, and traders can push it around on little volume and take out your stops. The same problem might exist with 24-hr stock trading. -v
What I meant to say is I hate gaps, whatever the cause. Ideally, I'd like everything to close at 4:00p.m. and force all the volume into that time slot, but that will never happen...Gaps are analogous to being in a war where every day at 4:00p.m. you have to take your flack jacket and helmet off and stop shooting while the enemy keeps his equipment on and fires away at you! You come look at your portfolio in the morning and you've found that you had a few casualties. I just want my stops to work, more slippage or not, during the off hours. Dave D.
I think Turok is basically correct. Compare ES or NQ ---- which trade 23 1/2 hours every weekday with the pit SP and ND contracts, which trade just 6 3/4 hours a day. There are sometimes reopening gaps in response to news when ES and NQ (along with Globex big S&P) resume trading at 4:45 ET each weekday, but they are minor compared to the often huge opening gaps that confront pit traders on the 9:30 ET morning opening. There is a major difference between order imbalances that accumulate over nearly 17 hours from those that have just 30 minutes to gather up a head of steam.
For many of us, the problem is one of liquidity. My trading style simply doesn't work under the current US pre- and after-hours due to insufficient interest by traders. And if you look at how the US market behaves, with all those traders disappearing at lunch time, it's hard to believe that you're ever going to get them to trade pre- and post-market hours. The US markets, and overseas markets, seem to be intimately tied to and limited by daily personal life patterns of behavior (breakfast, trade, lunch, trade, dinner, relax, sleep...). Better prospect for finding liquidity is to trade in overseas markets (see "Late Night Trading" thread).