Don's Openings, Part 6 2003

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Haven't visited this site for a while so I just read some posts going back to see what's what.

This is the problem with this stategy as I see it, (the way Don executes it anyway). He says look to win 7 out of 10. Fair enough.
He also says, among other things, he places "slingshot stop winners", say, 5-15 cents and watches for "shakeouts on positions going against him. Great.

But 3 losses of 25 cents each more than offsets 7 winners of .10 average.

Unless your so good and so fast that for the positions going in your favor you're able to cancel the "stop winner" orders and let your profits run and for those going against you, you "know" it's not just a shakeout and can cut your losses for mere pennies.
Are you that good, Don?

Lescor, on the other hand, appears to be a bit more loose with his unwind strategy; willing to lose a bit more to make more. True?
 
Quote from Oz Cillator:

Haven't visited this site for a while so I just read some posts going back to see what's what.

This is the problem with this stategy as I see it, (the way Don executes it anyway). He says look to win 7 out of 10. Fair enough.
He also says, among other things, he places "slingshot stop winners", say, 5-15 cents and watches for "shakeouts on positions going against him. Great.

But 3 losses of 25 cents each more than offsets 7 winners of .10 average.

Unless your so good and so fast that for the positions going in your favor you're able to cancel the "stop winner" orders and let your profits run and for those going against you, you "know" it's not just a shakeout and can cut your losses for mere pennies.
Are you that good, Don?

Lescor, on the other hand, appears to be a bit more loose with his unwind strategy; willing to lose a bit more to make more. True?
More...

All I can say is "don't do it"...and thank you for all the guys who are making money consistently, including my new bootcampers every 2 months. I have not, in 25 years, found anything that even comes close for new people to start making money right away in the morning. The more advanced people who enter hundred of orders have taken this strategy to extremes. And, who in the Heck would hold a loss for 25 cents anyyway?

Welcome back....!!

Don :cool:
 
Quote from Don Bright:

And, who in the Heck would hold a loss for 25 cents anyyway?
More...

I've had many stocks hit me for 25 cents or more. Its not that I did it on purpose, but the specialist wouldn't print my stop until the stock had moved quite a bit. Usually though if a stock does that more than once in a blue moon then it gets fired. WLP is a perfect example. I once lost over 90 cents on a 15 cent stop, then the very next day he hit me for over 40 cents so I gave him the pink slip.

I have always wondered how best to balance the "sit through the shakeout" with the "never take a 25 cent loss" choice. I have seen several posts from Don in the past where he got out of a stock for a small loss/gain after the stock did a large "shakeout" that would have required holding though more than a 25 cent adverse move (specifically I remember a trade in FRE some months back because I was in it too and got burned pretty bad). Maybe if you get a chance Don you can explain how you make that hold though or cut and run decision.

Because I had trouble making the discretionary decision, I went to full automation where I just cut it at a set level, regardless. I am sure that cost me a lot compared to someone like lescor who is so good with his discretionary exits.
 
The last few classes have learned to pick their stocks with criteria that make the larger losses much less likely. A simple way is to get rid of all the stocks over $35 or so and up the share size (cheaper per share cost that way, anyway) and capture the nickels and dimes...and not fearing the big moves.

And with the adding of "zone trading" tactics" via fundamentals, the risks have really decreased.

Anyway, everyone....No. 1 - Don't get stuck in a rut!! Keep on learning and adapting to the market....

Don
 
Specialists system will change tremendously in 04!

By the way, trading for nickles and dimes won't work.

One big loss and there goes your profits.
 
Quote from xtrader:

Specialists system will change tremendously in 04!

By the way, trading for nickles and dimes won't work.

One big loss and there goes your profits.
More...

(Repeating myself). We all adapt to the market, and the new people, who are just completing training today are all prepared for the new year of trading (at least the next few months). The nickels and dimes are fine for the openings (one dime x 5,000 shares still equals $100K per year, not a bad start by doing the opening strategy)... but I don't like to concern myself with negatism's and "won't work" comments....I prefer to spend my energy showing people what IS working, day in and day out...by example and by direction.

And, yes, the systems may change...and hopefully we will see some justice with the mutual funds and all the other scoundrels, and perhaps "peace will break out"...and when all this happens, we simply step back, evaluate, and adapt to what is, and not worry about "what if's"...

If you worry about your losses, you will not have time to create profits. Never plan on losses, plan on winners...I don't use "stop losses" at all (maybe mental stops), I do use "exit winners" all the time....

Heck a little positive attitude might just help a bit around here...
dontcha think?

Don
 
I'll be the first to admit Don answers alot of questions and can be quite helpful. Some might question (as many past posters have) what his true motivations are. Are they purely altruistic? Perhaps. Or is it in his self-interest to tout this relatively low-risk strategy to young, hungry traders who might set up shop at his prop firm and churn that volume into big commission dollars?
Maybe. Who but Don himself can know for sure. And I am certainly not saying the opening strategy doesn't work. I utilized aspects of it for years as a facet of managing positions in stock options; just a way to adjust a delta and pick up a little extra quid on the opening. In point of fact I came up with an idea
(although I would never be so presumptuous to think no one else ever thought of this) to create an automated trading platform to send multiple opening-only orders to take advantage of imbalances and gaps long before I'd ever heard of Bright Trading or Elite Trader for that matter.

What I do know is this; in trading take nothing for granted. No
profitable strategy is as easy and straight-foward as Dons' spin would have one believe. It takes preparation and concentration and may not be worth the effort. As I said previously, assuming a 70% win rate, be careful you don't lose more on the 3 losers than you make on the 7 winners. I would think it very suspect if any trader implied he NEVER held on to a loser for more than a few pennies before he cut his losses. Or is Don implying that in every case of an opening position going against him (for the first nickel, lets say) he knows when it's a shakeout and thus to ride it out and when it's not and to cut and run (and, of course get back in at a better price). He'll be the first to admit this isn't an exact science; or does he have a crystal ball we don't know about?

I believe Don is an experienced and disciplined trader and what that is worth is immeasurable. I know that serves HIM well in HIS trading. What makes me a little suspicious is that Don has an answer for everything. He has a talent for spin that would make the shrewdest politician green with envy. In reading through these threads, on matters of theory and execution, he makes many, many contradictory statements, sometimes only a day apart. It gives me pause.

So, what is Don's motivation? I can't say. I hope it is pure.
Does the strategy (as he spells it out) work? It might and then it might not. Let the buyer beware.
 
Whatever Don's motives are, whether they are altruistic or self-serving or a combo is not really material in this discussion. There are enough people who have done this week in/week out w/ good results. As previous poster has said, when one reads this journals, one should not think that this is the holy grail, that this is effortless. It probably takes hard work, tape skills,oh and a nice set of you know what does'nt hurt either. One should remember that in journals like these, you only see the winning posters-an extreme case of survivorship bias. Sorta like going to the Oscars and seeing all the rich actors and wanting to be an actor when in fact 95% of the screen actors guild members are still waiting on tables.
 
I agree some probably make nice money trading the openings.
But it takes alot of effort and even more discipline (not to mention a bit of good fortune) to do it; especially when you're winners are yielding nickels and dimes. A few losers will eat that up in a hurry.
As far as motives go, as an individual trader, if you found a niche that made you money would you be so eager to tell the world about it? If you ran a prop firm, however, and the bulk of your income was generated by commissions you'd have a definite incentive to get others to jump on the train.
 
I've preached this same line on these opening only threads for quite some time. This strategy is not a gimme. Don puts a good spin on it, but he will readily admit that it's not for everyone. This has been my bread and butter strategy for the better part of two years, and I have worked tirelessly at it. Hundreds and hundreds of hours pouring over charts, statistics, writing macros, changing calculations in spreadsheets, tweaking and re-jigging. Yes, opening orders done as discussed on this thread, do put the odds in your favor. But it all boils down to one thing:

YOU STILL HAVE TO KNOW HOW TO TRADE!

You need strong risk management skills, know how to tape read, recognize good and bad situations quickly and react to them without hesitation. And some people who are good traders just don't do well with opening orders. It's a unique time of day and things play out very quickly, and with multiple positions on, some people are just out of their element.

I've mentored and taught the details of how I trade this strategy to many people, and almost none of them keep at it. They make or loose a little then find an excuse why they should stop doing it. Maybe it's just not for them, which is fine, but most of the time they don't have the work ethic or the passion to figure it out.

I agree it's a good way for new traders to get their feet wet once they've done the ground work. But most won't succeed at it because most don't succeed at trading in general.

And as for "who the heck would take a 25 cent loss?" Not Don. When that happens it called "being stubborn". Right Don?:)
 
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