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The Opening Orders Thread
- Thread starter Don Bright
- Start date
No substitute for doing the work on your own IMO. Some play it tight, some play it loose. Some choose to take a nickle, some choose to let them run for a few minutes. You need to figure out the right mix for you, and make the strategy your own.
As for the OPG strategy, whenever there are good days, everyone is always quick to jump in and try to "get" in on the action. Days like the other day, happen once a year events, and like most strategies, good days are followed by bad days, and vise versa, so if you plan on trading the open, give it some time, expect to go under water in the short term, and be patient while waiting for those really great days to come along.
As for the OPG strategy, whenever there are good days, everyone is always quick to jump in and try to "get" in on the action. Days like the other day, happen once a year events, and like most strategies, good days are followed by bad days, and vise versa, so if you plan on trading the open, give it some time, expect to go under water in the short term, and be patient while waiting for those really great days to come along.
Here is a real basic discussion and example (attached).
Also, you can Fair Value and pivot points here:
www.stocktrading.com/Tradinginfo.htm
Take it from there, and good luck. Start real slow, this process can take a while if not in a controlled learning environment, IMO.
(Sorry about the weird formatting, I pasted from a Powerpoint I did somewhere last year).
All the best,
Don
Also, you can Fair Value and pivot points here:
www.stocktrading.com/Tradinginfo.htm
Take it from there, and good luck. Start real slow, this process can take a while if not in a controlled learning environment, IMO.
(Sorry about the weird formatting, I pasted from a Powerpoint I did somewhere last year).
All the best,
Don
Attachments
Quote from mschey:
No substitute for doing the work on your own IMO. Some play it tight, some play it loose. Some choose to take a nickle, some choose to let them run for a few minutes. You need to figure out the right mix for you, and make the strategy your own.
As for the OPG strategy, whenever there are good days, everyone is always quick to jump in and try to "get" in on the action. Days like the other day, happen once a year events, and like most strategies, good days are followed by bad days, and vise versa, so if you plan on trading the open, give it some time, expect to go under water in the short term, and be patient while waiting for those really great days to come along.
Mike is right...I push my new people for consistency, not maximum return immediately. The stocks don't always retrace like you hope they would. You can always "dial up" the share size after you're comfortable with your consistency.
Don
Quote from TradeNYSE:
Ok I love how these questions go completely unanswered...
What was the S&P cash value this morning? What was the S&P future value this morning?
Where do you get these numbers on a daily basis?
What is a good envelope % to start/baseline with?
We assume you have a brokerage account, right? They give you quotes. SPX is the S&P Spot price on most platforms. I use my same platform for futures, using the latest eMini trade a couple of minutes before the opening. If you don't have access to quotes, then this is going to be pretty tough to do correctly.
SPX from yesterday's close was 1445.94. Futures were trading approximately 2 points above adjusted Fair Value when I submitted my orders.
Take spot price, add FV, get a sum. See where futures are at that moment, that determines how far the market is opening up or down.
Envelope is determined by how far up or down the market is opening, for my new people I use between .2 and .5 for the likely direction. If the market is opening up, use a smaller envelope since you've already adjusted the price based on where the futures are trading and don't want to be too far out of reach from the previous day's closing price.
I makes sure on the unlikely side (buy side this morning) that my bid is at least a dime lower than the previous closing price. You can use a simple excel sheet to do that with.
Don
Thanks Don, if you don't mind reviewing this and letting me know what you think.
Fair Value today 4.78 (based on programtrading)
$SPX opened at 1446.17
e-mini opened 1454.30
FV+Cash = 1450.95 = X
Future-X = 3.35
Change = +0.23%
Stock 1
AIG
Prev Close 65.96
Set to open +0.15 or 66.11 (65.96 x 0.23%)
Using Envelope of 2%
Offset = 66.11 x 2.00% = 1.32
Opening Orders
BID 64.79
OFFER 67.44
Can you tell me if that is correct, how you would adjust (for a conservative trader, not aggressive OO strategist).
Fair Value today 4.78 (based on programtrading)
$SPX opened at 1446.17
e-mini opened 1454.30
FV+Cash = 1450.95 = X
Future-X = 3.35
Change = +0.23%
Stock 1
AIG
Prev Close 65.96
Set to open +0.15 or 66.11 (65.96 x 0.23%)
Using Envelope of 2%
Offset = 66.11 x 2.00% = 1.32
Opening Orders
BID 64.79
OFFER 67.44
Can you tell me if that is correct, how you would adjust (for a conservative trader, not aggressive OO strategist).
Quote from TradeNYSE:
Thanks Don, if you don't mind reviewing this and letting me know what you think.
Fair Value today 4.78 (based on programtrading)
$SPX opened at 1446.17
e-mini opened 1454.30
FV+Cash = 1450.95 = X
Future-X = 3.35
Change = +0.23%
Stock 1
AIG
Prev Close 65.96
Set to open +0.15 or 66.11 (65.96 x 0.23%)
Using Envelope of 2%
Offset = 66.11 x 2.00% = 1.32
Opening Orders
BID 64.79
OFFER 67.44
Can you tell me if that is correct, how you would adjust (for a conservative trader, not aggressive OO strategist).
You need to use yesterday's closing price of the spot S&P. Since we don't know where or actually when the spot opens (500 stocks don't all open at once). You also need to know where the emini's are trading 5 minutes before the opening bell.
Determine the multiplier from these numbers, then apply to stock, then determine envelope.
You would never have that wide a spread. We use .5 max of 1 percent from estimated FV.
When TASC did a 10 year backtest, they just considered you sold if the stock opened on an uptick, or you would be long if the stock opened down, and they had a pretty good success ratio.
Don