Opening Orders - 2008

Quote from baller1069:

The thing that stops a lot of people from using this strategy is the risk.

Any small error or irregular event could totally destroy you.

Sending out 5mil worth of orders can be dangerous for those that are under capitalized.

Lescor has said on this forum that he has made spreadsheet errors and it has cost him 100k in less than an hour.
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Of course "stuff" happens, but rarely to any large degree. I teach my traders to check for any irregularities prior to the open. We check pre-open trading prices, news, up/downgrades, earnings, etc. All the normal stuff, this eliminates a lot of the risk.

And, since we are basically riding the Specialists shirt tails every morning, it is even more rare that he'll get caught up something extreme. Overall, this is simply a very high percentage play. And, since we're generally out with 5 minutes or so, it's less risky than a lot of other time frames/entries, etc.

All the best,

Don
 
Don,

Do you offer an automated system to all your traders, and do you charge extra for this?

You also hardly ever hav a losing day, why don't you take much bigger posistions?


Thanks alot,
Chaim
 
Quote from chaimshmerel:

Don,

Do you offer an automated system to all your traders, and do you charge extra for this?

You also hardly ever hav a losing day, why don't you take much bigger posistions?


Thanks alot,
Chaim
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We run seperate accounts (as do I)...I post up the basic limit for newer traders to show what can be done early on in their career.

We have various levels of automation, some is free, some can be "leased" from one of our programmer/traders, and of course, there are version for sale, all very cost effective.

Don
 
Quote from eastside:

We look at where the S&P futures are trading, then adjust for fair value to see where they "should" open. From there we use an "envelope" to adjust the prices.

The exact calculations are buried somewhere in the threads listed on page 1 here, probably several times, so you might be able to dig them up if you want.
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thanks - but i'm on top of the FV calc already - ie i can work out where the stock "should" open based on the futures. what don wrote was that he used a zero envelope because we were opening so far below fair value.

my question is - how do you know that the cash will open below the futures implied fair value before the 14:30 open? ie how did don know it was a good day to use a zero envelope?
 
Quote from RhinoTrader:

thanks - but i'm on top of the FV calc already - ie i can work out where the stock "should" open based on the futures. what don wrote was that he used a zero envelope because we were opening so far below fair value.

my question is - how do you know that the cash will open below the futures implied fair value before the 14:30 open? ie how did don know it was a good day to use a zero envelope?
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Whatever the futures are trading at will quickly revert to the spot price plus FV for that day almost immediately after the opening due to basic market mechanics and arb's.

When I use a zero envelope, all that means is the market is opening so far from the previous day's closing price, as with each stock expected to.....I don't want to place my orders any further away from the previous close. ......because I do want fills, I don't want to add additional enveloping.

(Hope that makes sense, LOL).

Don
 
Quote from Don Bright:

Whatever the futures are trading at will quickly revert to the spot price plus FV for that day almost immediately after the opening due to basic market mechanics and arb's.

When I use a zero envelope, all that means is the market is opening so far from the previous day's closing price, as with each stock expected to.....I don't want to place my orders any further away from the previous close. ......because I do want fills, I don't want to add additional enveloping.

(Hope that makes sense, LOL).

Don
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ok - understood. thanks don
 
Quote from Don Bright:

Of course "stuff" happens, but rarely to any large degree. I teach my traders to check for any irregularities prior to the open. We check pre-open trading prices, news, up/downgrades, earnings, etc. All the normal stuff, this eliminates a lot of the risk.

And, since we are basically riding the Specialists shirt tails every morning, it is even more rare that he'll get caught up something extreme. Overall, this is simply a very high percentage play. And, since we're generally out with 5 minutes or so, it's less risky than a lot of other time frames/entries, etc.

All the best,

Don
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Hi Don, maybe I've missed this in previous explanations of the strategy, but are you only trading on the NYSE? Does this strategy also work with Nasdaq stocks, or do you feel the presence of a Specialist is an integral part of the strategy's succes?

Thanks!
 
Quote from ratan961:

Hi Don, maybe I've missed this in previous explanations of the strategy, but are you only trading on the NYSE? Does this strategy also work with Nasdaq stocks, or do you feel the presence of a Specialist is an integral part of the strategy's succes?

Thanks!
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NYSE only, since there is no "opening" on Nasdaq (a "cross" but no imbalanced opening price). We want to be on same side as the Specialist when he's accomodating excessive buys or sells.

All the best,

Don
 
9 fills / 8500 shares

2 long / 7 short / - 716.00

worst offender...HPQ...meant to block on cisco news...-420.00

sloppy trade for me this am...glad it is over...
 
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