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Trading the Market on Close strategy ?
- Thread starter wercurna
- Start date
Hi,
Since I don't trade/know much about NYSE stocks much I have to ask.
What would be the problem with closing the position at market -- assuming there is enough headroom on the trade -- at 3:59 and change. Is there really that big a change on the closing 30 ticks or so?
Also, if the imbalance has reversed aren't you stuffed anyway?
Since I don't trade/know much about NYSE stocks much I have to ask.
What would be the problem with closing the position at market -- assuming there is enough headroom on the trade -- at 3:59 and change. Is there really that big a change on the closing 30 ticks or so?
Also, if the imbalance has reversed aren't you stuffed anyway?
Quote from prescott:
correct but the spec will not raise the price just for the simple fact to match orders, but to help himself out, ie selling at a higher price
You're right, the price will only gap in the direction of the imbalance if there are not enough offsetting MOC orders and the specialist has to take the stock into his own account.
Quote from prescott:
i do not think imbalances can flip after a certain time? i think the time is 3:40?
also i think you can only enter orders to help the imbalance after a certain time as well. i think the time is 3:40? not sure though
Yes they can, I've seen it happen, and I've seen people get really hurt. The initial imbalances come out at 3:40, and the revised imbalances come out at 3:50. Check out bloomberg today.
Quote from mbg:
FYI - MOC orders don't guarantee you the closing price, but something as close as possible to the closing price.
I think entering the market order at 3:59:45 would be fairly close IMO
Entering an order at 3:59:45 will not get you the closing price. The MOC price, on a stock with an imbalance, is usually different. Look back in June, and you'll see DNA gapped up a point after the last price before 4, and RD gapped down 2 points on the MOC.
Quote from ssternlight:
Hi,
Since I don't trade/know much about NYSE stocks much I have to ask.
What would be the problem with closing the position at market -- assuming there is enough headroom on the trade -- at 3:59 and change. Is there really that big a change on the closing 30 ticks or so?
Also, if the imbalance has reversed aren't you stuffed anyway?
If the imbalance isn't satisfied by trades entering offsetting MOC orders, then the specialist has to take the stock into his account, and will take it where it's safe for him. Atypical MOC will print a minute or more after the market close. Sometimes it can take as long as 30 minutes.
Remember, your MOC order has to be in by 3:53, and it's locked in for the duration of trading.
Stocks looking good on one day can open with a big gap against you the next day.