Of course "stuff" happens, but rarely to any large degree. I teach my traders to check for any irregularities prior to the open. We check pre-open trading prices, news, up/downgrades, earnings, etc. All the normal stuff, this eliminates a lot of the risk. And, since we are basically riding the Specialists shirt tails every morning, it is even more rare that he'll get caught up something extreme. Overall, this is simply a very high percentage play. And, since we're generally out with 5 minutes or so, it's less risky than a lot of other time frames/entries, etc. All the best, Don
Don, Do you offer an automated system to all your traders, and do you charge extra for this? You also hardly ever hav a losing day, why don't you take much bigger posistions? Thanks alot, Chaim
We run seperate accounts (as do I)...I post up the basic limit for newer traders to show what can be done early on in their career. We have various levels of automation, some is free, some can be "leased" from one of our programmer/traders, and of course, there are version for sale, all very cost effective. Don
thanks - but i'm on top of the FV calc already - ie i can work out where the stock "should" open based on the futures. what don wrote was that he used a zero envelope because we were opening so far below fair value. my question is - how do you know that the cash will open below the futures implied fair value before the 14:30 open? ie how did don know it was a good day to use a zero envelope?
Whatever the futures are trading at will quickly revert to the spot price plus FV for that day almost immediately after the opening due to basic market mechanics and arb's. When I use a zero envelope, all that means is the market is opening so far from the previous day's closing price, as with each stock expected to.....I don't want to place my orders any further away from the previous close. ......because I do want fills, I don't want to add additional enveloping. (Hope that makes sense, LOL). Don
Hi Don, maybe I've missed this in previous explanations of the strategy, but are you only trading on the NYSE? Does this strategy also work with Nasdaq stocks, or do you feel the presence of a Specialist is an integral part of the strategy's succes? Thanks!
NYSE only, since there is no "opening" on Nasdaq (a "cross" but no imbalanced opening price). We want to be on same side as the Specialist when he's accomodating excessive buys or sells. All the best, Don
9 fills / 8500 shares 2 long / 7 short / - 716.00 worst offender...HPQ...meant to block on cisco news...-420.00 sloppy trade for me this am...glad it is over...
I, too, didn't think to take out HPQ (my traders did for the most part, LOL). Down -$399 today. Back at it tomorrow. Don