Don's Openings, Part 5

[Don Bright]

Quote from theShadow:

its not really about enveloping correctly on OO

its about reading the tape after the fill.

CUT losers fast and let winners run.

UNFORTUNATELY, until you get extremely familiar with the stocks you trade, you will lose if you depend highly on probability.

I quit OO because the end result was alot of commissions for very little return.

Very sorry to hear that....we are still running a high probability, with nearly half of the money made by our traders being done on the openings and derivative strategies. I tend to "watch" the losers more closely, and perhaps hold longer (depending on overall tape reading), and take the profits rather quickly....before they turn on me. If I can average 50cents to 1.50, I feel pretty good about it.

You are correct, the getting "in" is easier, although the envelope is important, but the getting out takes some practice....that's why I use the same stocks day in and day out.

What have you found that is working for you lately?? Momentum is tough, RS still works in sectors most of the time, and pairs seem to be working....what are you making money with??

Don

 

[Don Bright]

Only 1 fill today....made 2 cents....basically a scratch....

Don

 

[egusc]

Quote from theShadow:

its not really about enveloping correctly on OO

its about reading the tape after the fill.

CUT losers fast and let winners run.

UNFORTUNATELY, until you get extremely familiar with the stocks you trade, you will lose if you depend highly on probability.

I quit OO because the end result was alot of commissions for very little return.

Enveloping is easier than the exit but if you don't price the Open orders well you will get killed.

When to Cut loses quickly is very difficult to determind. Many fills go against you right from the open but bounce back to even or a profit in a minute or two. Others just keep on going and kill many profitable days. My opinion is if you cut all loser quickly you will not be able to turn a profit with OO.

OO results in about 10% to 25% of profits paid in commissions, so its very commission intensive.

I had a good monday and tuesday so i am now about even for Nov.

Good luck

 

[Don Bright]

If you're paying 10% in commision, then you're making 7-10 cents per trade, which is not bad. If you're paying 25%, then you're probably either payint too much, or getting out too soon....IMO...

Don

 

[Babak]

Quote from theShadow:

its not really about enveloping correctly on OO
its about reading the tape after the fill.
CUT losers fast and let winners run.
UNFORTUNATELY, until you get extremely familiar with the stocks you trade, you will lose if you depend highly on probability.
I quit OO because the end result was alot of commissions for very little return.

You seem to have caught on. See what I wrote a long time ago:
http://www.elitetrader.com/vb/showthread.php?s=&postid=102156&highlight=OO#post102156

"There are many nuances as this is NOT a system but really an art. I think newbies should be strongly urged against playing the OO unless they understand this. The tweaks that can be added are:

1] instead of Beta use ATR
2] use large caps, or mid caps or a mix
3] how and when to vary the envelope %
4] the mix of sectors/industries to use
5] which stocks to flat outright, NOT use
6] how to manage the trade and exit once filled

I think that a person can only become adept at the list above through experimentation. Just like any other trading strategy a 'tuition' has to be paid so that you can reach the summit."

http://www.elitetrader.com/vb/showthread.php?s=&postid=96362&highlight=OO#post96362

The OO is basically trading...you just happen to be trading the open. But just because it is the open doesn't mean you will win. Rather you will win when you know how to trade. Period.

 

[Don Bright]

I agree, Babak....this is just an easy way for people to get into trades with a high probability (with the Specialist, vs. against the Specialist), and there are no "systems"...this has proven to be a great tool for traders to learn what trading is all about. This gets them past the "should I buy, should I sell" first mental block.

Don

 

[WECoyote]

Dear Sir,

Where can one get, including any sunscription services, order imbalances for the open and the close. This would include the amount of imbalance and any other analytics. The info should available as soon as it is avaialble and updated up until the actual open and close.

Regards,

 

[Don Bright]

Quote from WECoyote:

Dear Sir,

Where can one get, including any sunscription services, order imbalances for the open and the close. This would include the amount of imbalance and any other analytics. The info should available as soon as it is avaialble and updated up until the actual open and close.

Regards,

This is a standard feature on RediPlus...check www.redi.com

Don

 

[dafugginman]

bloomberg and dow jones have them also.

 

[Don Bright]

My DJ only shows the share imbalances, not the opening indications....do you have an additional service that shows pricing indications in the morning??

Don