The Dead Cat Bounce Theory Message Board

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Strategies & Market Trends : The Dead Cat Bounce Theory

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To: Clark D. Gumeson who wrote (51)	3/20/1997 6:32:00 PM
From: Richard Query	of 1836

Clark On bid & ask.... there is a bid price & an ask price, as a small investor you would have to place a market order to be sure and get filled as close to the end of the day as the talk on this thread is talking about, When you sell you will only get the bid price. The difference between the ask & the bid at any time is called the spread, this may only be 1/8 or could be 3/4 or more. Lets say you place a market to buy a stock that has a bid of 9 1/4 and an ask of 10.00. At the end of the day you check the current price and it is 10 5/8, Great up 5/8 already the first day Wrong you may actualy still be down 1/8 if you sold right then as the bid price might only be 9 7/8 with the ask at 10 5/8. This is a more extreme example but is something you need to know when you buy a stock. So in recap what I'm really tring to say is you need to calculate your break even point up front. Using the above data and 12.50 commision (just to make calcs easy) on a 100 shares the price of the stock would have to move up 1.00 to break even... 3/4 for the spread plus 12.50(1/8) commision to buy & 12.50(1/8) to sell. Hope this clears up what I was talking about.

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