jim_c_hill
61 posts
msg #28731
- Ignore jim_c_hill |
9/20/2003 2:12:58 PM
TheRumpledOne
Even though I do not trade low priced stocks I do find your comments useful and interesting. I have a question re your trading penny type stocks. When you trade what type of bid/ask spreads does one encounter in real penny stock trading and how do you minimize this on your trading in terms of achieving net profit? Also, is there sufficient liquidity to do your trades all the time or do you encounter situations where you do not make a trade if you give a limit price?
thanks
Jim
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TheRumpledOne
6,411 posts
msg #28742
- Ignore TheRumpledOne |
9/20/2003 6:48:34 PM
Jim:
The spreads can be as tight as .001 and as wide as 2 or more cents.
Not sure what you mean by minimize... If the spread is wide enough, I will better the bid and ask and essentially become the market maker in the stock. That is called CAPTURING THE SPREAD. It can be risky but the reward can be worth it. It is fun to do in premarket and after hours.
I got aced out of a profit of $11,000 on 25,000 CYPT on Tuesday this week because I placed my buy order at the ASK price of $1.12 when CYPT bottomed at $1.11. I tried again at $1.15 and at $1.18 and didn't even get a partial fill. My charts didn't signal SELL until CYPT hit $1.56!! Win some, lose some, miss some...
Also this week, the market maker NITE kept backing off the bid everytime I would place a my 49,000 share sell order for NEOM. Not to mention not fill my 49,000 buy orders. It's a jungle out there and the big boys are playing for keeps. A lot of dirty tricks go on in the pit. But the rewards are worth it if you can tough it out. Every penny move up means $490 in my pocket if I can sell at that price. I was happy when my sell order for 49,000 NEOM filled at .36 on Monday, considering I had paid .27 for them!
I bet you wonder why 49,000 instead of 50,000. That is because I use Ameritrade and all orders of 50,000 or higher go to review, which delays execution. I don't want any delays! So I rapid fire 49,000 shares orders one after the other.
Any order of 10,000 shares or more is considered a BLOCK ORDER and the rules change slightly. Something for you to research and study.
I hope I have answered your questions. Feel free to ask more.
Also, if you want, Jim, some of us "Muddies" have a live chat room going on PalTalk. Download from www.paltalk.com. Add THERUMPLEDONE to your pal list. PM me and I will invite you into the chat room.
MAY ALL YOUR FILLS BE COMPLETE.
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jim_c_hill
61 posts
msg #28743
- Ignore jim_c_hill |
9/20/2003 7:17:04 PM
TheRumpledOne
Thanks for your detailed response. By capturing the spread am I interpreting this by this example correctly?
Stock Z
Bid .15
Ask .19
If you were buying you might offer .17 and if you were selling you might ask .18?
Also, since you are buying 49000 shares, what minimum liquidity in average volume per day do you like to see?
thanks
Jim
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TheRumpledOne
6,411 posts
msg #28753
- Ignore TheRumpledOne |
9/20/2003 11:42:34 PM
Close...
I would beat the bid by either .005 or .01. Same on the ask. Don't want to give up more than I have to.
As far as liquidity, I don't want to own more than 1% of the daily average volume.
Also, as the price rises, the number of shares I trade drops... don't want to risk too much capital.
Feel free to ask more questions.
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jim_c_hill
61 posts
msg #28755
- Ignore jim_c_hill |
9/21/2003 1:16:42 AM
TheRumpledOne
Thanks for the information and how you trade the spread. You are closer to the bid and ask than I thought. I can see where you are definitely trying to scalp the bid and ask.
It would be interesting to try some of this type of trading if I only had the time during the day.
Jim
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chetron
2,817 posts
msg #65985
- Ignore chetron |
8/8/2008 9:26:27 PM
MAYBE....
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