StockFetcher Forums · General Discussion · Timing the buys<< >>Post Follow-up
aswoerner
3 posts
msg #27956
Ignore aswoerner
8/22/2003 11:06:33 AM

Here is my problem:

When I pick the stocks I want to buy the next day and enter them with buy order (with the closing price from the previous day), it often happens that the order does not get filled, because the opening price is already higher than the previous close price.

Because my % gain of each stock is based on 1-2% /day, this higher opening can make a big difference and I may not be able to get 1-2%.

It of course can be the other way and the opening price is lower than the previous close, than I also lose money.

So, the question is, when is the right time to buy????
-Right after the open (than I need time at 9:30, which I do not have)

Does anybody of you have any good ideas of how to manage this?

Thanks a lot



jim_c_hill
61 posts
msg #27957
Ignore jim_c_hill
8/22/2003 11:17:04 AM

And the problem of the open price being significantly different than the previous close is one of my big problems with the performance report of stockfetcher. It is not realistic re how people trade and gives false impressions, particularly if a significant portion of a % gain occurs on the first day.
JH


bigjake842
6 posts
msg #27958
Ignore bigjake842
8/22/2003 12:06:24 PM

>>it often happens that the order does not get filled, because the opening price is already higher than the previous close price<<

Yes; you are running into the problem of 'gap ups' at the open. Here are two complementary ways you can handle this:

#1 Look for securities which tend to exhibit smooth price changes, day to day--those stocks which generally do NOT gap up or down at the open. An example, at random, would be Walgreen Company (WAG). Look at that daily chart to see a stock which doesn't usually have opening gaps.

#2 In my experience, 'high volume' stocks tend to be highly liquid, and thus do not experience many gaps at the open. Again, Walgreen (typically average daily volume somewhere around 3 million shares) is a good example.

So, look for higher average volume securities which historically don't gap much.

As far as 'when to buy' is concerned, I use two strategies.

First, and most of all, I avoid the opening hour or so for those stocks I want to hold through the day or overnight (eg, for swing trades of 1-3 days). I'll have a watchlist of a few 'interesting' stocks, but I won't buy them unless and until they cross their buy points AFTER the first hour of trading. Why? Because a stock may have some 'exciting' news before the open, the novices pile in and drive the price way up in the first half hour, but then they sell off and the price drops like a rock, meaning that you are in a position you really don't want. So, for any stock I want to hold through the day, or longer, I'll wait until 'amateur hour' (roughly 8:30-9:30 Central) has passed, then look for the buy cross.

Alternatively, sometimes I see a volatile stock right at the open and I'll enter as a pure momentum scalp play, planning to hold the stock FOR A FEW MINUTES ONLY. I watch the security on a minute chart and exit as soon as the momentum begins to stall. In other words, I take some of the action, but get out before the stock tops out in that first hour.



Noahedwinbeach2
135 posts
msg #27962
Ignore Noahedwinbeach2
8/22/2003 3:39:57 PM

Or you could use the box theory like I have. I bought TDF on the 18th at $13 and I have made 4% so far. I use the box theory and put a stop loss at $11.79. Stop day trading and go with something more stable.


TheRumpledOne
6,358 posts
msg #27963
Ignore TheRumpledOne
8/22/2003 5:36:03 PM

You could use the Muddy Method and wait for stocks that are GREEN at 9:40 am and have not gone up by more than 3 - 4% to enter for swing trades.

You could at your computer at 8:00 A.M. EST and trade in pre-market where big money can be made. Also, in pre-market it is true first come, first filled. No auto-execution/partial fill crap if the shares are available. So if a stock is running on news, you can buy/sell in minutes and make your 2% or more and be done trading by the open.

GOOD LUCK ON YOUR FILTERS AND TRADES.


StockFetcher Forums · General Discussion · Timing the buys<< >>Post Follow-up

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