You are right he did... Lance is the "da man!" right now.
Market Orders.... Why I use them sometimes:
My broker is NDB. MOs are $14.75. I trade on the same side (buy or sell) of a stock during the course of a trading day for this price. This is a little known or believed (but true) fact.
When I want to accumulate stock, I do it by buying small amounts with MOs. For example: I want to buy 20K shares of a low float stock... If I order 20K MO, the MMs will run from it and fill me on the way up. I get screwed. IF I put in a LIMIT order for 20K, they will fill 5K (maybe) and move away from the order. If the stock is moving I may never get filled even if I put the limit price above the current ask. This has happened a few times.
How do I get my stock? I buy 1 or 2K at market... Or if the stock is $2-5 and a very low float, I may order 200-500 shares at a time... these orders usually get filled almost immediately especially if volume is light. Once my first order is filled, I will continue this process until I have all the stock I need. The first buy is $14.75. The rest are free as long as it is on the SAME side (BUY OR SELL). Small orders will not run the MMs off. If I get hosed on the price, It is only a small amount of stock. In a new stock or stock with 0 volume for many days, I will try a limit order for a small amount in the spread and see if I get filled. This usually doesn't work so I use small MOs. This will give me a chance to see how the stock will move.... I am in effect, "going fishing".
Selling... same thing... when a stock is moving up rapidly, I sell small amounts with MOs. This works well because: I am not spooking anyone out of the stock by placing a large limit sell and getting it executed... Small buys/sells do not generally disturb the price structure. I use these small MOs when the stock is MOVING UP, not down. This is important.
When you have a low float stock, it is hard to buy in the spread. The spread is often ugly (.125 (1/8) or more); this is a function of the fact that there are fewer MMs and a small amount of stock for sale. MM positions are going to be further apart. Large limit orders in the spread usually don't work and will sometimes stall movement. Why do this? It does work if the stock moves down, but if it doesn't then you get no stock. Example: USWL yesterday.... I know that when it came out around 2PM or so, A bunch of people put limit orders at 7/16 and 1/2. Bid/ask was 7/16 X 9/16. My feelings were that with the stock so thin and only 3 MMs between current price and $1+, the stock would move very fast on light buying pressure. While others were fooling around with Limit orders and adjusting their orders as the stock moved, I was buying 1000 and 1200 share amounts from 9/16 all the way through 3/4. I bought a total of 8200 shares this way. Final bid was 13/16. I Bought IVTX now THCL this way using small MOs (most of it at 5/8).
The whole point is: IF I THINK A STOCK IS GOING TO MOVE RAPIDLY UP ONCE IT RECEIVES ATTENTION, I AM GETTING THE STOCK. I WILL BUY INTO A .20+ SPREAD IF I THINK IN THE COMING DAYS (OR MINUTES) THE STOCK WILL MOVE SIGNIFICANTLY HIGHER.
I UNDERSTAND THE RELATIONSHIP BETWEEN FLOAT AND SPREAD. I LIKE LOW FLOAT STOCKS. THEY ARE SCARY BUT AT LEAST THEY MOVE. SOMETIMES I GET BURNED BUT MY BIGGEST WINNERS HAVE BEEN LOW FLOAT STOCKS.
I have accumulated 9K EBOT in the last few days, usually in big spreads like 7/16 X 11/16. Why? Well, the stock is very thin and I think it will move much higher once the web page news comes out (if the market lets it). What difference does it really make if I bought my stock at 9/16 or 11/16 if I sell at $3?
MY OPINIONS
Tom |
