Trading Pre and the Open

Praetorian, Hitman, et al:

Thanks for the posts; much appreciated.

OK. So we've narrowed the list of NYSE stocks to the following nine...

ADI,AGN,CLS,DNA,DYN,F,FLR,LH,SPW

Let me know if I missed any, Preatorian.

We all agree that reading the tape is important, but I'm still unsure of what to look for. Any pointers here? What is Mrs. D looking for, Hitman?

Also, reading the Specialist is important. Just what do you look for to learn about the Specialist, Praetorian?

The list of strategies (for the Open till 11am) are...

1. After 10am, trade stocks making New Highs/Lows; I assume the stop-loss should be placed just within the new High/Low.

2. Use the pre-market to trade on news. For example, if a company posts bad earnings after the close, I would buy at the pre-market in anticipation of the stock rising before 11am.

3. Trade the bounce off of Support and Resistance points (usually yesterday's intraday points); again, set the stop-loss just outside the point.

Again, I appreciate everyones input to this thread.

BTW, I wonder if RTHARP is following this and has anything to contribute.

TIA, Ron
 
In the first hour DO NOT USE STOPS. I never do. I average it. If im wrong, then I'll have a good basis and blow it out close to flat. They'll try to gun all 3 stops. Once the stops have been taken out, then you can use stops. As for stocks to trade, that's a poor list. Try trading AMD, I've had a lot of luck with it. It's pretty easy to scalp dimes on a few k shares using the futs and island. Also try DIS and MO. Those 2 have made me probably 100 points together already this year in dime scalps. As for what to watch for, just watch. Don't look for anything, just watch.
 
I'll disagree with Pretorian on a few parts above.


DON'T use stops, for me that's nuts. I'm wrong about 50% of the time. My stop makes me have a small loss. When I'm right I have a HUGE GAIN. but I need stops to be able to trade till that huge gain comes. You'll notice about 99% of the traders featured in the Market Wizard series talked about stops........in some form or another.

It works for Pretorian to post that, but for most traders I would disagree.

Then there is don't trade this stock or only trade this stock.

Such as IBM Pretorian2 talks about he's dangerous. Well I know a guy who ONLY trades IBM and makes a few million a year.

Different stocks take different strategies.
 
Praetorian, rtharp:

I've adjusted the list to include the last post (and added IBM). Praetorian, the others on the list were based on your previous post, so I'm confused as to why the list is not good.

ADI,AGN,CLS,DNA,DYN,F,FLR,LH,SPW,AOL,DIS,MO,IBM

With regard to NO STOPS (and averaging as it moves against you), the risk is it may never rebound, then your loss is huge. An alternative would be to re-enter at the lower inflection points, keeping stops tight. The only risk then is not getting filled or a poor fill when it does reach a bottom.

I have been watching the bid-ask and the TOS. I understand that over time I'll become more aware or sensitive to impending changes, but it would help to know generally what I'm looking for. A few examples might be helpful here, especially in defining the behavior of various specialists for the list above.

rtharp, I'm curious about the strategy for IBM. Is it predominantly based on the behavior of the specialist, tape reading, support/resistance, scalping, what?

Again, thanks for your input.

--Ron



 
I sometimes trade from 9:30 to 10 but it can be a little tricky b/c you need to react very quickly. Most of my profits are made b/w 10-12 and 1-close.
 
I said not to do Ibm mainly b/c of the fact that it is over 100 and you said you have limited capital. If you can't take 1k shares minimum of ibm and try and scalp quarters, why bother, you are better off buying a 20 buck stock and getting more shares. I have had bad experiences waiting for ibm fills, and now don't trade it. Rtharp, I'm sure your guy knows his stuff, and if you understand any stock, you'll bank.
As for the no stop thing, I truely believe that. When I say don't stop, I'm basically using a 3 point channel where the opening print is the middle. The specialist will blow all 3 stops by 9:50 only to have the stock end where it started 95% of the time. So why bother. Just make like him and get a good average at the extreme moves so you can boot them for nice gains before you take your large position at like 10:00 for the overall movement direction. Not using stops is stupid. But using them in the first 20 mins just gets you whipsawed. I'd rather risk the once a month 3 point loss, than loose a half three times a day when my stops are blown.
 
My point is trading is trading. There are certain rules a trader must follow. IBM might not work for you but it can for someone else. There is a buyer and a seller around. One guy makes money in the transaction and one will lose.


My type of trading is usually with the specialist. He's heavily weighted on one side of the market I'm joining him on. He usually doesn't care about a few stops and traders like me around him, he's gunning for points when he is trading for what I'm looking at.. When I stop out it's because there are still others who heavily want to take the opposite side. The specialist will go with them and when they are gone take this trade direction again.


I also usually make about 80% of my money in the first 40 minutes of the open. Other traders can't trade the first 20 minutes but I find that one of the most golden trading times of the day.
rtharp
 
I agree that the first 20 minutes is where you can make alot of profits, but during that time I'm only right about 45% of the time so I risk minimal capital.

I like to wait for the market to settle down in order to decipher the stock's characteristics and determine how it will behave for the day.

I'm successful about 65% of the time after the first 20-40 minutes so I increase the volume of each trade during this time.
 
For me, when played properly (especially having bullets for those short days), the open is without any question the best time of the day to make money. In summer time, it has been the only time to make money for me.

Ron:

Your watch list is too tough for a new trader, not only half of those stocks are on Worldco's restricted list, but those guys are all world class. Try some tier 2's, stocks do not need to move that much for you to make money, you are a professional day trader who will be given (eventually) massive sizes to work with, you don't need multiple points to make money, all you need is a half here, a three quarter here . . . and you are set . . .
 
Some traders like the volatilty of EMLX, and JNPR of 15 points a day (when they were in their prime)

other traders I know prefer CSCO, MSFT, and INTC due to the small range. They had a very STRONG support and resistance levels which were easy to identify.


Both can work, depends on the trader.

I agree with hitman, bullets in the open are an incredible way to make money. Either the stock tanks, and you are short with it, or it barely goes up. The majority of the drop is in the first hour.


rtharp
 
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