Don's Opening's Journal....

D

Don Bright

OK, I have not tried this yet, but I have been asked about the opening plays and how they have worked out. Since I show this to our new traders at our school, I thought it would be ok to post it here. It is just an excel spread sheet, showing my "automated" opening plays, number of stocks, envelope percentage, number of winners, losers, and P&L.

Not exceptional, but the point that I am trying to make is that new traders can pay for their first year's "learning curve" if they simply try out strategies that are working currently (and this strategy is working currently).

This may show up in another thread as well.

I welcome any comments...
 

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Don,

seems to me that my research on the subject pretty much correlates with your results in the spreadsheet. I have put down 50 stocks of which I think would be a good fit for the opening only orders. So far (though I have only monitored 150 opening fills or so) it seems that some stocks have significantly more positive "edges" or openings than others. I have also located a couple of loosers during this last 30 days or so. For instance, you would have been killed in AXP 5 times last month with no winnings in the stock as well. So I guess the clue is to monitor stocks with that special potential and elimininate the worst of them. Otherwise anyone with interest in this subject is very welcome with input or further research on this.

Among my 50 stocks I have avoided stocks with prices below 40 bucks, except EK. Doesn't seem to be that much to collect in those price ranges(?). Mostly my picks are in the 40-60 bucks range, except for a couple above 90-100. :cool:
 
The most important issue (in my opinion)is the enveloped pricing for each issue. We try to modify the over/under based on sector, volatility, and then adjust them for the current fair value calculations.

The longer term "analysis" done be several others simply put in pricing based on prior day closing prices which can be disasterous (trust me on this, I have seen traders attempt it)...

Exit strategies should be the same for any trade, but it takes time to follow several stocks at one time effectively.
 
Don,

It would be really helpful if you explained this in more detail. How do you pick the stocks, are you looking for something opening below fair value, how do you determine fair value ( I'm not asking for secrets just some basic info), etc. Thanks much.
 
You have 700 + orders........is that BUY & SELL total ? or just to Open position..............based on $15 a trade thats almost 11,000 in commisions no ? Or maybe i am confused...how does the P&L breakdown with commisions included ? or am I incorrect with the order amount ?

Just asking so I get a better idea of what your posting.....thanks
chris
 
Originally posted by AAAintheBeltway
Don,

It would be really helpful if you explained this in more detail. How do you pick the stocks, are you looking for something opening below fair value, how do you determine fair value ( I'm not asking for secrets just some basic info), etc. Thanks much.
More...

I use the same stocks every day. Since most successful traders don't look for new stocks every day (preferring to become "surrogate specialsts" in a few issues), this is a good way to start every day on the same side as the Specialist. The pricing models vary from trader to trader, but we try to focus on basic fair values.
 
Originally posted by Don Bright


I use the same stocks every day. Since most of our successful traders don't look for new stocks every day (preferring to become "surrogate specialsts" in a few issues), this is a good way to start every day on the same side as the Specialist. The pricing models vary from trader to trader, but we try to focus on basic fair values.
More...
 
Originally posted by Chartwiz212
You have 700 + orders........is that BUY & SELL total ? or just to Open position..............based on $15 a trade thats almost 11,000 in commisions no ? Or maybe i am confused...how does the P&L breakdown with commisions included ? or am I incorrect with the order amount ?

Just asking so I get a better idea of what your posting.....thanks
chris
More...

I don't know where you surmised the above?. I place 13 buys and 13 sell orders each day, and I get filled on around 3-6 (as you can see on the spread sheet). Low costs, high rewards...one little drawback for retail traders is that they may not be "allowed" to enter buys and sells on the same stocks at the same time.

Simple strategy, I used it back in the 1970's (see even "old dogs" know a few things)...:-)
 
Don,

that went a little over my head! Are you saying that you don't do the same stocks on the opnings every day? And please explain what you mean by it's dangerous to use previously day's closing price. I thought that was the idea!! If for instance EK closed at 30 and our fair value calc shows that the market should open 0.5% up. I would assume that since fair value for EK then is 30.15. Further I then place 0.5 below and above that specific price, and if filled hopefully have a good chance of getting 25 cents or so. Tell me if I am way over my head on this. Traders at Bright I have talked too who only does these types or orders, have conformed this approach. :confused:
 
Originally posted by The edge
Don,

that went a little over my head! Are you saying that you don't do the same stocks on the opnings every day? And please explain what you mean by it's dangerous to use previously day's closing price. I thought that was the idea!! If for instance EK closed at 30 and our fair value calc shows that the market should open 0.5% up. I would assume that since fair value for EK then is 30.15. Further I then place 0.5 below and above that specific price, and if filled hopefully have a good chance of getting 25 cents or so. Tell me if I am way over my head on this. Traders at Bright I have talked too who only does these types or orders, have conformed this approach. :confused:
More...

I use the same stocks every day (I do modify my list every so often), and the prices entered are based on the expected opening price (similar to what you have posted, but with a little "tweaking"). I try to adjust envelopes based on sectors and the stock betas to allow for entering "tighter" spreads.

I just want to be on the same side as the Specialist....

The exit's are a bit more tricky and you need to get to "know your stocks" a bit (since most stocks do have a trading "personality").
 
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