Don's Openings, Part 6 2003

[mdl060374]

Quote from Predictor:

Anybody ever try to double down on a position if it goes against them by a certain amount, would have worked wonders today! Any suggestions?

I know of a few who have any it usually backfires in their face. I have never tried... (One time I did by mistake, when I tried to cover..)

As a general rule, I find anytime you have a loss right off the bat, it usually ends up being a loss I have found. You have to reasonable with wiggel room of course (I give about .10), so it is best to cover them and pay attention to the winners.

 

[mdl060374]

It seems like many here are running the opening orders regardless of where the SPU's are trading. I usuallu run it only when they are +/- 3-10 pts from the close...

today I believe they were only 1 or 1/2 points away (wasnt in my parameters so didnt really remmeber)..

Can anyone add any insight to why/when they decide to run or not run the open?

thanks

P.S. I always heard that a relatively flat market is dangerous b/c there will be no "snap-back" action, and the stocks will make a less predictable run...

 

[Don Bright]

Quote from Predictor:

Anybody ever try to double down on a position if it goes against them by a certain amount, would have worked wonders today! Any suggestions?

Be careful with the idea of "averaging down" whether it be from the opening or during the day.....it can be the kiss of death.

Don

 

[Brandonf]

Quote from Predictor:

Anybody ever try to double down on a position if it goes against them by a certain amount, would have worked wonders today! Any suggestions?

Doubling down works great almost every time....except when it doesn't and then you will never be able to double down again.

 

[Don Bright]

Quote from Ron In-a-sauna:




whats teh new focus

We have focused more on fundamentals, stock selection, even a few technicals, the necessary ingredients for day in and day out trading. The market has reverted back complely regarding ranges and volatility, so we need to have our traders feeling comfortable with a little more research (what to look for and why).

Don

 

[Don Bright]

Quote from mdl060374:

It seems like many here are running the opening orders regardless of where the SPU's are trading. I usuallu run it only when they are +/- 3-10 pts from the close...

today I believe they were only 1 or 1/2 points away (wasnt in my parameters so didnt really remmeber)..

Can anyone add any insight to why/when they decide to run or not run the open?

thanks

P.S. I always heard that a relatively flat market is dangerous b/c there will be no "snap-back" action, and the stocks will make a less predictable run...

The lower volatility requires much, much, tighter envelopes, and perhaps a few other changes in mind-set. This is is the difference between playing the opening only orders, vs. playing for gaps only. I like it when we have a combination of the two.

Don

 

[mdl060374]

Quote from Don Bright:



The lower volatility requires much, much, tighter envelopes, and perhaps a few other changes in mind-set. This is is the difference between playing the opening only orders, vs. playing for gaps only. I like it when we have a combination of the two.

Don

I understand why you are using tighter bands to get fills, but your profit potential seems so much less and and your risk much more.... Maybe I am thinking backwards?

 

[DaveN]

Quote from Predictor:

Anybody ever try to double down on a position if it goes against them by a certain amount, would have worked wonders today! Any suggestions?

I think many people have indicated that this can be very risky. I agree generally with what they are saying.

However, I want to add a possible exception: if this is a stock that you know very well, trade day in and day out, know this move is extreme, know the specialist's personality, etc. AND.... you have the risk tolerance as well as the account size to cover the drawdown/possible loss, then you could consider it.... ( How's that for an extensive list of cautions...?)

You could still be getting crushed by a big buyer or seller, and lose multiples as much money, but with your experience on that stock, you'll already know how far out it's trading, whether the specialist will pull back and give you a chance to exit gracefully, and have a pretty good idea of how long these buyers and sellers typically will go versus how much "heat" you can take.

 

[TonySanDiego]

I don't know if it was Echo/Stirling again or what. But my charts and quotes didn't look right until I restarted the software.

One fill on OO PDG for -.01

I notice an hour and a half (almost) and ABC still is not open.

and in other news.....

BMY +01
BP .00
BP +.04
BP -.06 leaned on a 50K offer which went poof..
BMY +.06
USB +.07
KRB +.02

Break even morning after commissions and bullets. Should have stayed in bed.

 

[Ron In-a-sauna]

Quote from DaveN:



I think many people have indicated that this can be very risky. I agree generally with what they are saying.

However, I want to add a possible exception: if this is a stock that you know very well, trade day in and day out, know this move is extreme, know the specialist's personality, etc. AND.... you have the risk tolerance as well as the account size to cover the drawdown/possible loss, then you could consider it.... ( How's that for an extensive list of cautions...?)

You could still be getting crushed by a big buyer or seller, and lose multiples as much money, but with your experience on that stock, you'll already know how far out it's trading, whether the specialist will pull back and give you a chance to exit gracefully, and have a pretty good idea of how long these buyers and sellers typically will go versus how much "heat" you can take.

not to beat the horse... and you wont find many that will advocate a "doubling down" adding strategy, myself included, but just wanted to add another insight, and another pitfall is you may do this a few times, and , it actually WILL work quite well, and then you will be more inclined to do in the future b/c of past success and then you WILL get killed eventually... so dont even go down that road the first time...