High Bid Ask Spread

I will think about that. Using buy stops worked before for me. However, that was for stocks which had high volume. I choose this stock from a list on the WSJ titled Biggest 1500 Stocks. I did not realize that "Biggest" did not have anything to do with volume. My mistake. I will have to review and see what the chances of a large bid ask spread are for stocks with high volume. E*TRADE told me my strategy worked before because the volume was different. Looks like high volume stocks will have smaller spreads at the opening. But can I count on that or was I just lucky before? I'm not sure.


E*TRADE has replied and told me it was a valid trade as the ask price was above my buy price. On a buy stop the order becomes a market order when the ask price is at or above the order price. I still don't see any chart with a trade above 20 on that day but unless I learn something more I don't think I will go any further in my inquiry.

Thanks
 
I didnt look at the charts but based on the face of what you said I would guess that two things happened.

it traded on the NYSE and

Their was an order imbalance at the open and you were on the wrong side to have a market order to fill.

When their is an imbalance the specialist will put the price at a point where he is almost writing out a paycheck to himself from my experience.

The larger the imbalance the bigger the movement right after the opening print.

Best of trading to you
 
The stock trades on the NYSE and, yes, I don't doubt the imbalance observation. I also looked the spread yesterday at the opening and it was over $1. The spread then dropped to 10 cents 16 or so seconds after I had bought it on Monday- i.e. 9:34:11 (Monday spread about $1.10) vs 9:34:27(Wednesday spread approx 10 cents). We live and learn.

Can you, or anyone, tell me what daily volume amount I should look for if I don't want to be hurt by large bid ask spreads at the opening. I don't day trade and put my trade in the night before. Worked well until now. Like I posted earlier, this stock, unknown to me, had a much lower trading volume that I had thought. I originally looked at stocks with at least (for the day I pickled them out of the paper) 600,000 shares traded. ETRADE commented to me about a trade I made for a stock which traded in the milliions. They said the bid ask spread for that high volume will be small. Is at least 600,000 shares traded a day too low a volume? And can this happen to any stock? If so, how often?

Thanks
 
Quote from DANTON:

The stock trades on the NYSE and, yes, I don't doubt the imbalance observation. I also looked the spread yesterday at the opening and it was over $1. The spread then dropped to 10 cents 16 or so seconds after I had bought it on Monday- i.e. 9:34:11 (Monday spread about $1.10) vs 9:34:27(Wednesday spread approx 10 cents). We live and learn.

Can you, or anyone, tell me what daily volume amount I should look for if I don't want to be hurt by large bid ask spreads at the opening. I don't day trade and put my trade in the night before. Worked well until now. Like I posted earlier, this stock, unknown to me, had a much lower trading volume that I had thought. I originally looked at stocks with at least (for the day I pickled them out of the paper) 600,000 shares traded. ETRADE commented to me about a trade I made for a stock which traded in the milliions. They said the bid ask spread for that high volume will be small. Is at least 600,000 shares traded a day too low a volume? And can this happen to any stock? If so, how often?

Thanks
More...

In general high price/low volume stocks tend to have larger spreads. Also, the spread on a particular market center is usually wider that NBBO.
But every stock is different. Lear the stock before trading it.
 
Quote from speculatus:

In general high price/low volume stocks tend to have larger spreads. Also, the spread on a particular market center is usually wider that NBBO.
But every stock is different. Lear the stock before trading it.
More...

I agree with the above post.

for 600K average per day stocks the difference between an above normal day and a below normal volume day will make the NBBO look like night and day.

Also if this is above say 80 per share that will make the spread wider.

To answer your question, to avoid spreads that are "wide" go with stocks that trade at least 900K per day ave with 900K being the very least. This also means stocks less than 100 per share. This will give you about 850-900 stocks to pick from. Yahoo has a stock screener tool to do exactly that (I use it)
 
I tried the YAHOO stock screener for volume and set the criteria to >= 1m. But so far I can't type in more than the top 99 out of over 1000. Can you tell me how I can type in, say, 1000?

Thanks
 
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