Profit off market open

[marcadrian]

When the US stocks rally hard like they did last night, and everyone is expecting a rally, can you still profit if you're not holding any stocks from the day before?

I tried this the other week after the US rallied the night before and bought BHP at 10.04AM, but because it had gapped up it was already at the top of the buying range for that stock. It stayed there until about 11AM and when the rally died my profits went with it.

If it is 9AM and you know we'll get a decent rally, at least for an hour, what is the best way to profit from this?

 

[white_goodman]

Re: Profit off market-open

id say gun the delorian to 88mph

 

[skyQuake]

Re: Profit off market-open

When the US stocks rally hard like they did last night, and everyone is expecting a rally, can you still profit if you're not holding any stocks from the day before?

I tried this the other week after the US rallied the night before and bought BHP at 10.04AM, but because it had gapped up it was already at the top of the buying range for that stock. It stayed there until about 11AM and when the rally died my profits went with it.

If it is 9AM and you know we'll get a decent rally, at least for an hour, what is the best way to profit from this?

Short futures open at 9:50 : D
then long everything at 10:15

 

[prawn_86]

Yeh i would have to agree with skyQuake and say go short, looking for a fade out...

Wouldnt work everythime though.

 

[Glen48]

Re: Profit off market-open

I got caught I tried to buy LNC at 901 with Comsec and could not get in until about 905 but they opened at 2.70 up from 2.400 I think the best thing to do is not buy until about 10 (11DLS) that's my rule but I failed to sit to it.

 

[Sean K]

Re: Profit off market-open

id say gun the delorian to 88mph

I'm with wg.

Or, just throw a few banana skins into the flux capaciter.

 

[skyQuake]

Yeh i would have to agree with skyQuake and say go short, looking for a fade out...

Wouldnt work everythime though.

Yah, only works if the US has a BIGGG rally

 

[Glen48]

Why is LNC closed at 2.40 and opens the next day at 2.747?
Why can'tou buy in on the dot at opening instead of having to wait until 5 past i would assume this should be all done by computer.

 

[skyQuake]

ASX opens at 10am, its a staggered open so LNC would open at around 10:05.
The prices you see before it opens are premarket bids and offers ie. Not real.
Closed yesterday at $2.40, overnight gap from strong DOW causes it to open at 2.74. Can't really profit from that gap unless you were on it before...

 

[fimmwolf]

When the US stocks rally hard like they did last night, and everyone is expecting a rally, can you still profit if you're not holding any stocks from the day before?

I tried this the other week after the US rallied the night before and bought BHP at 10.04AM, but because it had gapped up it was already at the top of the buying range for that stock. It stayed there until about 11AM and when the rally died my profits went with it.

If it is 9AM and you know we'll get a decent rally, at least for an hour, what is the best way to profit from this?

I'd say you should have a pivot calculated as well as support and resistance levels from the previous days HLC.

 

[awg]

my experience is you get burnt if you enter at market on open after an overnight rally, especially recently. (although I have'nt been doing much buying)

You can look at the close the night before regarding volume and direction

and have a peek at the worldwide futures index's to see where they are heading.

Bloombergs site shows those.

does anyone have a better site for world futures index that shows directions prior to the 4.00pm ASX close?

 

[Matthieu85]

money.cnn.com has all the futures for Dow jones, Nasdaq and S&P500.

Very usefull site, i use it all the time.
Dow futures are up 250 points atm (4:47pm AEST) so looking at maybe another good day tomororw.

 

[awg]

yes I look at the CNN futures site as well.

One thing I am planning to do, which I was inspired by a post from Trembling Hand.

plot the futures prices for US, FTSE and OZ, and closing trend on ASX, see what correlation there is for price rises for ASX next day.

have found poor expectancy for trading the open, really think I need to trade the close...as they say "amateurs in the morning, pros in the arvo"

although with recent volatility, up days are just as often followed by down!

another thing I have observed, and wondered, slightly off track, but the correlation of SPI price and XJO, as displayed on Commsec website.

Have noticed that directional correlation is fairly high, ie SPI is a leading indicator, which u would expect to some extent...but I have also read that it is no guide at all, due to the way it is traded..ie for hedging etc.

hopefully I get time to do this for a while, I think TH mentioned shutting himself in a cave for 2 years

 

[derty]

I also look at the CNN site where I can.

I also have started using iGoogle with a business page set up. You can set it up with all sorts of information and news. Though the Global Index Watch is very useful as it displays all the major Indices in what seems to be the order that they open with the NZ exchange at the bottom and the DJIA at the top. I check it a few times a day and night just to see how things are unfolding.

 

[Reealjrd]

Hello Friends,

CNN is also a very good platform for traders regarding the news about the market. It tells you all about the ups and downs in the market. I also prefer it for news. Although i don't trade maximum but i keep and eye on the market news through CNN and different channels.

 

[Johno]

What if you bought right after the market stopped trading for the day at about 4.12pm? If you put an order in at that piont, whats the chances of you getting profit from that gap up to the next morning?

The reason to buy after market is so you can check the dow and then cancel your order if you need to, while still being in line in case the dow rallies...?

 

[nomore4s]

What if you bought right after the market stopped trading for the day at about 4.12pm? If you put an order in at that piont, whats the chances of you getting profit from that gap up to the next morning?

The reason to buy after market is so you can check the dow and then cancel your order if you need to, while still being in line in case the dow rallies...?

Johno, you can have your order in at 4:12pm but it isn't processed until the next morning.

If your buy order is in at $1.00 but the stock opens at $1.10 your order won't get filled on the open.

The only way you can profit from a gap up on open is by being on the stock the day before.

 

[Johno]

But how does it gap up? Where does the money in that gap go?

 

[Trembling Hand]

But how does it gap up? Where does the money in that gap go?

Think of it as a simple transaction at 4:10 PM. 1 Buyer agrees to sell XYZ @ $1,00 and 1 Seller agrees to sell XYZ @ $1,00. So you get a trade.

Over night the US is up Big time because all the worlds problems have been solved So now the holder from last night wants to sell but at $1.10 and there is someone who want to buy it off him for $1,10. So they trade.

Simple. There is your gap.

Only complicated bit is there are 100s of buyers and sellers on the open/close and its just an price/volume weighted Action.

 

[sails]

But how does it gap up? Where does the money in that gap go?

To put it another way (same end result as TH):

It gaps up because sellers want a higher price due to the US being up overnight or other positive events before trading begins for the day.

The profits or loss from that gap goes to people with open positions (not unfilled orders). eg. In an upside gap, buyers profit, short sellers lose.

A retail order placed at 4.12pm remains an unfilled order overnight. If you still want to buy the morning after an upside gap (not suggesting it's a good idea-just illustrating!), it will be more expensive.