Don's Openings, Part 6 2003

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Thanks for the support, and "for Gosh's sakes" all I am doing is posting a journal with accurate results...and rather than trying to sell someone a Red Light/Green light CD, or some "gawdawful" advisory service..I just point out that there are ways to make money ....for Some People....and of course this is just a small part of what trader's do...and what we do is constantly changing.

I even have to yell at my own traders when they start complaining about not making money....Bob and I always ask "are you doing your openings?" "When did you return to our advanced class?" (free, of course)...and all the basic questions.

And, yes, it is "self serving" when we jump on our own traders... we have a gigantic vested interest in their continued success... and we will come on a bit strong at times (at least that's the perception)... but when it comes to ET, the magazine (TASC), the radio shows, or the college classes...it is more of a "labor of love" on both our parts...since we realize that (maybe) 1 in a 100 will ever "have what it takes" to begin trading at this level....but we really like teaching and seeing the "sparks in their eyes"..

And, my wife teaches 2nd grade, so it gives us something in common....(Some Traders = 2nd Graders....LOL)....

Anyway, sometimes a "cigar is just a cigar"...so, again, thanks for the support, and for the continuing "analysis" of my motivations.. it's cheaper than paying a shrink.

Don :p
 
Quote from Don Bright:

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)...

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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
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Can there really be any doubt about the motivations?

5000 shares is what's being pushed now? Yowza.

5 positions x 5000 shares x (say) 0.2 cents/share x 2 entry/exit x 500 traders x 200 trading days = $10,000,000. Nice.

I also appreciated the reply to the question of how to go about deciding which losers to cut short and which to give a bit more room. Thanks Don.
 
Quote from spect8or:

Can there really be any doubt about the motivations?

5000 shares is what's being pushed now? Yowza.

5 positions x 5000 shares x (say) 0.2 cents/share x 2 entry/exit x 500 traders x 200 trading days = $10,000,000. Nice.

I also appreciated the reply to the question of how to go about deciding which losers to cut short and which to give a bit more room. Thanks Don.
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Gee, another negative (and wrong) non-believer. Costs above 1,000 shares mean that traders can get IN and OUT for less than 1 cent (so they TRADER makes more money, and thereby stays longer). I personally do 2,000 shares on the open...we try to ADD UP to 5,000 total for that Dime and the $100,000...Geez..

note from "Participator to Spectator" see the difference (sorry, just couldn't resist).... :D

And, boy do I wish your numbers were even close to reality... how humorous...

Don
 
OK, back to reality...

4 fills (2,000 shares each at a cost of .5 each way, for those who really want to know). $440 gross.

Net-net of $360 (in 8 minutes).....shoulda made more in IBM, but my slingshot was a bit slow in getting in....darn....!!


Don
 
Quote from Don Bright:

Gee, another negative (and wrong) non-believer. Costs above 1,000 shares mean that traders can get IN and OUT for less than 1 cent (so they TRADER makes more money, and thereby stays longer). I personally do 2,000 shares on the open...we try to ADD UP to 5,000 total for that Dime and the $100,000...Geez..

note from "Participator to Spectator" see the difference (sorry, just couldn't resist).... :D

And, boy do I wish your numbers were even close to reality... how humorous...

Don
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Oh okay then. Then why defend taking dime winners by saying you can still make $100k with them? If you are talking about netting a dime, then it doesn't matter whether your average winner is 60 cents or 5 cents. Talk about obfuscating.

As for my numbers, I wonder just how far off reality they are?
I think a good estimate would be that your guys on mean average do at least 20,000 shares a day. And surely you are clearing at least 0.2 cents a share aren't you? And you do have more than 500 traders don't you?
So, using those figures, 20,000 x .002 x 500 x 200 = $4MM. Still pretty nice.
 
Quote from spect8or:

Oh okay then. Then why defend taking dime winners by saying you can still make $100k with them? If you are talking about netting a dime, then it doesn't matter whether your average winner is 60 cents or 5 cents. Talk about obfuscating.

As for my numbers, I wonder just how far off reality they are?
I think a good estimate would be that your guys on mean average do at least 20,000 shares a day. And surely you are clearing at least 0.2 cents a share aren't you? And you do have more than 500 traders don't you?
So, using those figures, 20,000 x .002 x 500 x 200 = $4MM. Still pretty nice.
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Maybe "in the day" before the price wars....not quite that kind of margin these days...and those darn office leases just keep on going....

No hard feelings at all...sometimes it seem that I may be "defensive" but those who know me will tell you that I take most of this in stride, and it's actually "therapy" of sorts... from the stress of trading/training (and dealing with my brother all day)...LOL

Don
 
Ah, Don ya old sea dog. I wouldn't be surprised if you're doing more than 0.2. (Otherwise why not self clear?) And I'd have a hard time believing those most of those rents are higher than $4k/month, considering you don't need prime location and most offices are quite small. But yep, no hard feelings. Might even pop in say ciao when in Vegas in a few months.
 
Whatever Don's motivations are in pushing the opening strategy.
I could care less. If his traders make money using it, that's great.
But if the main motive is that it makes him a lot of money due to the commissions these traders generate then I say, "Don, just admit it. Afterall, you are a businessman; no one will think less of you for trying to make money".

As far as losses go it's inconceivable you've never held onto a
position that was showing a 25 cent paper loss given your past warnings about "shakeouts", unless you talk out of both sides of your mouth. As I've said to you before you can't know whether a stocks immediate, post-opening action is a shakeout or not until the scenerio plays itself out. If you buy your 2000 shares of XYZ down $1 on the opening and the next several trades take the stock down 5 or 10 or yes even 25 cents (remember those stop orders on the specialists book you talk about) and the stock then bounces right back, we can then say it was a shakeout. If the stock, however continues down and doesn't come back, then we know it wasn't. But assuming your a mere mortal, like the rest of us, you can't know this ahead of time. Therefore, unless all your opening purchases never trade lower and your sales never trade higher, you're going to have situations where you're holding a "losing" position in the few moments immediately following the opening. This is where things get dicey and watching the futures and those tape reading skills come into play. I'm sure you'll agree one of the worst qualities a trader can have is stubborness. So if your long position of 2000 XYZ trades,say, 10 cents lower post-opening and you bite the bullet and blow it out and the stock trades lower still, then you're a hero. You may even get back in at a better price, as you often say. But if you didn't sell out because, for whatever reason, you were convinced a shakeout was occuring (I'm only talking about a handful of prints) are you saying your paper loss on a position NEVER reaches 25 cents? Are you implying that a 25 cent paper loss, by definition, is something other than a shakeout. Conversely, if you did bite the bullet and blow out a "losing" position for a 5,10,15 cent or whatever, loss and the stock immediately bounced back, then you were the victim of the very shakeout you warn novice traders against.

There is no shame in this. Trading is an art not an exact science.
On this we can agree. The point is ANY scenerio is possible and we don't the result or what to call it until it plays out. I think the best anyone can do is factor in all available information, keep in mind your individual trading discipline and risk tolerance, use your best judgment, and let the chips fall where they may. You may have a set amount of time you're willing to hold a losing position or a set amount you're willing to have it go against you.

I guess what irks me about you is (as long as you put yourself out there as the authority on this strategy) you never seem to answer THESE TOUGH QUESTIONS when asked, as happened again in the past day or so. Rather, you often give these stock (no pun intended) answers that really sidestep the issues.
Come on Don; stop being a politician...put your neck out there. LOL. If you were only kidding about never having a 25 cent loser, I apologize for not recognizing your joke.
 
Well, now you got me really laughing, and I thank you for that... and, YES, I have had more than my share of 25 cent losers LOL.

There is no "neck sticking" going on around here...I just post up what I do so that the people who read the magazine and listen to what we say can actually see some numbers. If you think that this 10 minutes a day of openings is all that Bob and I do, trading wise all day...well, obviously it's not.

This is just on small sample of how we try to get our people doing well. And to this day, a major chunk of our trader's money is made using derivations of this strategy.

All we are doing is sharing with the Specialist...and if you all subscribe to the theory that the "specialist is out for himself" then you would think that we would want to be on his side for the opening, and take a little profit with him.

It's just not a big deal...this is just plain trading...I've done this since the 1970's when the Specialist would send out imbalances before the opening to us in San Francisco to see if we wanted to join in....it's just easier now.

Don
 
Quote from Oz Cillator:


I guess what irks me about you is (as long as you put yourself out there as the authority on this strategy) you never seem to answer THESE TOUGH QUESTIONS when asked, as happened again in the past day or so. Rather, you often give these stock (no pun intended) answers that really sidestep the issues.
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Well, there you go Oz. I'm sure Don's latest answer cleared up any concerns you had about 'shakeouts'.
 
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