<<<<<<<<<<<Completely agree with your cautions on trading. If you want to sell at the daily low, just put in a stop loss on one of our favorite drillers. If the opening price is anywhere near the stop, the trade will go thru and trading will resume back up at the true market price. Learned this by expensive experience. In each actual case my stop order trade went thru at market open $2 below trades occurring in the next few minutes. Hope someone out there is enjoying my money!
My advice is to only use stops if you enjoy the experience of being screwed and only use market orders if speed is critical and you don't care much about the price. At least with limits you know what you are getting.>>>>>>>>>>>>
My personal insights:
(I used to exclusively daytrade oil stocks, I now position trade them)
As a daytrader I made most of my money off of "The Average Investor" who sometimes sells at market at the open, who uses stops on illiquid or even liquid names, and scalping inefficiencies.
1. Selling at the market at the open: Many oil service and drilling stocks are quite illiquid and have thin floats...I can't count how many times I have seen these stocks gap up or down at the open on extremely light volume. I remember watching FGII gap down 2 points on 1300 shares once. This in turn caused stops to trip and created a great buying opportunity. After a 10 second scan for news I bought and watched it move back in line with the other stocks. SO...I wouldn't use market orders at the open on oil service or drilling stocks, there are ALOT of people waiting to take advantage of you, both Market Maker and Trader alike. This is why you often see a stocks opening price be their high or low for the day.
2. Using stops: If you are a novice trader or investor I would NOT use stops. If you are an investor, you should care less about short term price flucuations because you are INVESTING...if you are a novice trader you are just asking for losses. It's not a tough concept to figure out where alot of stops are set using technical analysis, psychology, and a little common sense. There are alot of people who make a living running stops.
3. Scalping inefficiencies: I won't get into this because it doesn't have much bearing on the subject...but if you daytrade oil stocks long enough, you often find patterns and get a "feel" for them. When there is an inefficiency, they are often easy to scalp.
I notice alot of people who are meddling with trading on this board. Coming from a trader, I wouldn't reccomend daytrading, though position trading, I feel, is something everyone should understand and know how to do. The best of the best are essentially position traders: Buffet, Soros, Cramer, ect. If you do decide to daytrade, do it correctly...RT quotes, Level 2, RT NYMEX (an absolute MUST), and good methods of execution such as Selectnet, SOES, and an ECN (INCA preferably). If you are a position trader, you actually don't even need RT quotes though they are beneficial.
Finally, the Specialists on the NYSE usually keep tighter spreads than Market Makers, but it mostly has to do with order flow and liquidity. However, trades are now represented, so it doesn't make much difference...and with the advent of ECN's, MM's don't have as huge of an advantage as they once did. (Though they still do) We could spend days on the subject but since the is for Oil Drilling, I won't. If you want to read up on various things that have to do with the subject, check www.nasdaqtrader.com, www.nasdaq.com, and www,nyse.com.
D. Chapman |
