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Strategies & Market Trends : DAYTRADING Fundamentals
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To: Ally who wrote (10518)10/30/2000 9:21:44 PM
From: Dustin  Read Replies (1) of 18137
 
Re: Overnight Risk

I don't mean to carry on a dead-end debate, but there were a few things that I disagree with in your post. I'm a strong believer in not holding overnight, and it's not just because I am following the "gospel".

I think it is unproven as yet whether holding inventory overnight actually increases risk
In my opinion the extra risk comes from the possibility of a trading halt on bad news. It would be a rare occurrence, but it could hurt big time.

So, if you're a day trader, you could still react after regular hours
It doesn't really matter that direct-access platforms are available until 8pm because they can't help you in a halt. I know there are also halts during regular hours too, but much less frequent.

Day trading is a relatively recent pursuit, and only tests conducted over time would prove whether being flat at the end of a trading day is really the correct strategy to control and limit risk.
To me daytrading is all about making high probability/low risk trades using instinct and TA. Just hoping that the stock will gap in my direction doesn't seem like a sound business plan.

It assumes that there is no continuity in a stock's movement from one day to the next.
I doubt anyone here assumes that. It's just that most of us don't know a high probability/low risk way to trade gaps.

Dustin
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