It appears that many of the stocks that have great momentum and that end up performing well, are lower volume stocks. Since mutual funds place extremely large orders, do they actually trade these type of stocks? Do they follow any kind of guideline for the amount of shares they would buy as a % of daily volume.
Here's the rule I use; Average Daily Volume / 1000 So, let's say a stock trades 1,000,000 per day; I can easily get in/out of 1,000 sh. I mostly trade Naz stocks with over 5 million sh average daily volume. -FastTrader
Along the lines of fast trader's reply and OT vis a vis the above The rules for trading come from two constraint facets: your capital and the market's liquidity. I position trade over several days. My constraints are that I focus on one money stream a day and therefore I have but 6 to 8 streams maximum. I buy with each stream up to the limitation the market and my method then dictates. My method is designed for high volatility stocks of high quality. They are constrained to a maximum float and that gets me to a daily quantity traded per day. Max float is 30 million. My exits dictate the number of shares I can buy. I will buy no more than 10% of the daily exit volume of a given stock when it is peaking. I determine the peaking volume of every stock I consider owning. I cannot allow myself to buy a stock that has a DU (Dry Up) volume of less than 200,000 share per day. This is about 25% to 35% of the 65 day average volume. The final constraint is the fills on the exit of the stock. I exit with partial fills that are equal to or less than the upper size blocks going through on the T&S. I have a hard upper limit of shares owned in any particular issue as a consequence of all of this. I am an amateur and small potatoes compared to others. But I do have a high rate of capital appreciation by doing what I do. I have an absolute upper limit for the types of stocks I trade at 100,000 shares ownership per stream of money in my captial. I enter in a day and exit in a day. I do not trade more than 10% of the cumulative volume at any time during any given day. As an example: an exit on 100,000 share of a 28 dollar stock will take about 4 1/2 hours when 1,1 million shares are traded and approximately 31 partial fills are required. A corresponding entry on that same stock required 20 partial fills and the average price at that time was about 11 dollars where the entry day volume is on the first of second day of Break Out volume from the DU volume.
I doubt that. Only way to do that is to be the specialist's or market maker's friend. Unless by "without problems" he meant 50 cents or so on a stock with normal volume. Today, some idiot in FSH went market with 5,000 shares twice. He got the first print 55 cents up and the second print 65 cents up. We are talking about 5,000 shares. LOL Guess who was short at that time. Grrrr. Regardless, I made my money back and then some since that buyer kept returning. Only he got a little smarter and stopped going market with the full order.
Grob, Thanks for the great post. Is this the way Mutual Funds buy lower volume stocks? Let's say a stock has a daily volume of 200,000 shares. Would they buy and sell 20,000 shares using the same methods you mention above? Would 20,000 shares be too little or too much for a Mutual Fund in the above scenario. I know that traders that trade for themselves, like Fast_Trader, trade 0.1% of daily volume and others have recommended 0.2% of daily volume, but I am interested in how the Mutual Funds would trade a stock and whether they have a minimum volume/price criteria for stocks that they trade. Thanks to everyone for the posts.
Is it possible to contact the speaker and get that information? Post it here if you do. Do they trade lower volume stocks?
The post and presentation you are quoting are from 2 years ago, so I'm afraid I don't have any further detail. My question from posts within the last few days pertains to Mutual funds and what their position is when it comes to stocks that are low daily volume eg. < 500,000 and that perform extremely well. Do they trade these type of stocks and if so, how?
make a few phone calls. I have met with Janus staff and they are all over the place They trade in a whole range of ways, often off the board and directly with other parties. Some funds in Janus turn money over many tomes a year and also their list of holdings as well. Meaning they both cycle in and out of stocks more than once.
Grob109, Since you require one day to enter and one day to exit, how many days do your trades normally last on average? Have you ever found yourself in a situation where you needed to dump your entire position much quicker than you ideally would like to, and how would you handle something like that and what would the outcome normally be? If you would like to buy a stock at $28, what would your fills normally be like when you do 20 partial fills and likewise what would your fills be like when you exit with 31 partial fills if your target exit price is $35? Thanks, gemini