StockFetcher Forums · General Discussion · Before open trades<< >>Post Follow-up
rrochon
117 posts
msg #33243
Ignore rrochon
9/15/2004 1:27:07 AM

I notice that sometimes, at the close, a stock's price will change from a bid/ask price of 5.70/5.75 to 0/9000. I assume that they do this, because there is no after hours trading on these stocks and they do not want any orders placed after the market is closed.

If the closing price was 5.75 I might want to place a buy stop order before I go to bed, on the open, of 5.80. Is it possible to do this when the bid/ask says 0/9000?

Dick




EWZuber
1,373 posts
msg #33244
Ignore EWZuber
9/15/2004 3:05:49 AM

I would call the broker and ask if it is possible to place the order for regular session only.


robdavis
69 posts
msg #33246
Ignore robdavis
9/15/2004 5:31:26 AM

Dick,

Changing a bid/ask from 5.70/5.75 to 0/9000, on the surface at least, does not seem right. If there's no trading, then what's the point of bidding/asking anything?

If they really want to discourage any orders while the market is closed, which I doubt, then that discouragement is going to hurt them in the pocket book the following morning, when there are fewer orders than usual.

One possible explanation is, brokers/salemen/specialists/market makers want to avoid the law/exchamge rule that says in effect, "Thou must honor your bid, and must buy at least 100 shares per customer, if you bid was at 5.70."

From your perspective, I don't believe that placing a buy stop outside market hours is going to hurt you in any way, but if you really-really wanted to be on the safe side, you could wait till 9:30. But, even that postponement can be unsafe, because it could lead to big losses, as we know, some of the markets biggest price swings occur between 9:30 and 10:15 a.m.

One solution is, let's keep in mind, with trading on the Internet, anything is possible, assuming your broker's software guys wrote the right code for your broker. Therefore I suggest you experiment and place a buy stop order at $9.00, just as an experiment, and see what happens. If the $9.00 order is accepted (by your broker's computer), chances are a similar order for $5.80 will be accepted as well.

Sometimes it's better to place a buy stop order before one goes to bed, when the phones are quiet, when there's little or no distraction. If one waits till the open, the situation can get a bit crazy. At the open anything can happen.

Let's hope this "anything" I'm talking about will mean a big profit for you.

I hope this helps.

Rob



EWZuber
1,373 posts
msg #33255
Ignore EWZuber
9/15/2004 6:06:27 PM

The practice of changing the bid and ask at the end of the session is typical on any NYSE stock, I suspect because it is not fully automated and still operates on specialists that close deals verbally.
When the specialists are off the clock there is no one on the floor to trade.
I once saw a huge block for BBY go for a penny a share at the open because someone sold at the bid before any active bids were posted.


robdavis
69 posts
msg #33263
Ignore robdavis
9/16/2004 12:41:32 PM

EWZuber,

> I once saw a huge block for BBY go for a penny a share at the open because someone sold at the bid before any active bids were posted.

It sounds like one unlucky trader, desperate to sell a huge block of BBY, placed his order before the open, and he used a MARKET order, and the time his order was filled the bid/ask was still something like 0.01/9,000.00. A pretty unlikely combination, but, as we know, it is a possibility, and in real life anything can happen.

Lesson #1: We should not place a *market* order, unless we're really, really, really desperate, because anyhthing can AND will happen!

Now, doesn't this give you an idea?

Lesson #2: We CAN use our buying power to pick up stocks at 0.01 per share. Perhaps not every day, but, if we have a bit of patience, it's easier than we think. Opportunities are waiting for us like ripe fruit on trees!

I hope this helps.

Rob


rrochon
117 posts
msg #33316
Ignore rrochon
9/19/2004 8:17:30 PM

I often have Medved Quote Tracker running at the close, and you can watch many stocks post a 0/9000 bid/ask price, even though the last trade may have been 5.75.

I trade on the internet with Freetrade, so there is no way to communicate with the brokerage.

If a large block of BBY was sold on the open at .01, because no bid/ask had yet been set since the 0/9000 price was posted at the close, I would be afraid of placing an order to buy at the open with a buy stop a tic above the close, because $9000 a share would be hard to swallow. Not that they would be able to debit my account with a trade that large.

But if it gapped up on the open above my buy stop, I could get stuck paying more than I wanted to, unless I used a stop-limit. Then I may get left behind.

So, I just may have to get up before the open and manually place my orders, even if it is 6:30 here. What a pain.

Dick




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