Don's Openings Pt. 2

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1 % (.5 % above, .5 % below)

except for one low beta toilet paper company which I use .8 % (.4% above , .4% below). I wiped up 8 cents on that one today.
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No wonder! Be careful with those .5 above below on big up/down days!

Then again, the bigger the balls, the bigger the gain :)

How'd you feel on managing 7! fills?

nitro
 
Originally posted by mgkrebs
1 % (.5 % above, .5 % below)

except for one low beta toilet paper company which I use .8 % (.4% above , .4% below). I wiped up 8 cents on that one today.
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Just a comment: 1% is 1% below and 1% above in my book.
 
Filled on all longs today and the spooze just kept going down. I was not real psyched with 7 longs and futures tanking. Anyway, 7 fills, all longs, net 38 cents on losers, net 55 cents on winners = +17 cents. 7 positions is way too many for me to watch, I think I need to expand my envelope.
 
Why not trade the opening mechanically ?

Instead of watching the MM activity, just put in a 'limit' cover order at, say halfway the difference of the opening print and the theoretical fair value ? This allows you to handle more orders. If by a certain time you haven't been filled, close the trades at current market prices (at the latest 9.45am). Works reasonable well for me.

Oliver
 
Originally posted by chs245
Why not trade the opening mechanically ?

Instead of watching the MM activity, just put in a 'limit' cover order at, say halfway the difference of the opening print and the theoretical fair value ? This allows you to handle more orders. If by a certain time you haven't been filled, close the trades at current market prices (at the latest 9.45am). Works reasonable well for me.

Oliver
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It has been tried many (too many) times, with no success. The "getting in" is easy, the "getting out" takes some training and a lot of practice. And what "MM activity" are you referring to? There is no "opening" on the Nasdaq, only on listed stocks with the Specialist system...which makes it necessary to understand how the whole game is played...and "mechanical systems" have just plain not worked.

One more thing...there is no "theoretical fair value" after the stock has opened...this calculation is only used for the initial "opening only" orders.
 
I base my concept on action and reaction. If at the open the stock should have opened at a certain fair value as indicated by the futures, and it opens outside the envelope, then I assume that there will be a reaction which pulls the stock back towards the calculated FV.
Thereby I assume of course that the opening print was an aberration or mispricing. Of course that isn't always the case as sometimes (or most of the times?) there is a reason why the stock opens outside the envelope, but the key point is that you trade WITH the specialist and in most cases he will bring back the price a bit towards the theoretical indicated FV so that he can cover his position at a profit.

Oliver
 
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