Buying after market

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johno

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Post Number: 1
Registered: 01-2009

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Monday, January 19, 2009 - 01:35 pm:

Hi, im new to trading and basically want to buy after market so that if the DOW is down, i can cancel my order and not lose money. The problem im having is that I am somehow losing money between placing the order and it opening on monday - even if the stock has gained 7% or whatever. I think i might be setting my limit order too high - 10% above the last close price.

Any ideas?

chart_rider

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Monday, January 19, 2009 - 06:51 pm:

johno

I'm not sure what you exactly mean by after market. The Australian market does not have after market trading, unless you are referring to the closing auction between 16.00 and 16.10.

Any orders placed at a limit price after market will be filled at the next opening price, provided it crosses an order on the other side.

CR

johno

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Monday, January 19, 2009 - 06:56 pm:

Chart rider, I meant to say putting your order in after market close. You know how your waiting for a stock to take off but the dow keeps it down? Well when the dow finally turns green and that oversold stock gaps up between the previous days days close and the new day open...Its that gap up that I want to know how to gain without having to buy in trading hours the afternoon before. Do you know what I mean?...

I want to get my order in ASAP after market closes, so im in line for the gap up if it happens, but if the dow is down again, i can cancell my order and try again the next day.

chart_rider

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Monday, January 19, 2009 - 08:55 pm:

johno

I think you may be chasing something that's not available.

If you place a buy order after closing, the order will not do anything until the open. If the order bid price is high enough, it will fill at the opening price. The only way for this not to happen is to buy, during market hours, the day before the gap. If it were any different, gaps would not occur.

Trading's like that, it's based on expectations and probabilities, rather than certainties.

CR

colin_twiggs

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Monday, January 19, 2009 - 09:01 pm:

johno,

What market are you looking to trade?
CR is referring to the ASX.

Regards,
Colin

johno

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Monday, January 19, 2009 - 09:49 pm:

CR, i wonder if you or someone else could explain to me how a gap up happens. I cant quiet get my head around how it closes at one price and then opens at a higher level and there is no entry point available in between. Twiggs, im looking at trading on the ASX.

dfshares

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Monday, January 19, 2009 - 09:59 pm:

Johno

Placing an order 10% above the last close price will ensure you get the trade at open the next morning, but I would only use that strategy in a medium / long term trending market. The current bear market is often range trading and is not suited to this type of strategy.

For example last week the market fell some 5% (XAO open Monday 3690 to close Friday 3495).

This week I had decided the market would go long and NCM was looking good for a buy. It gapped up 6.7% on open which is within your 10% allowance. (Friday close $28.95 to Monday open $30.88).

Did I take the opening trade? No way, in my opinion most of the price action for NCM this week has probably happened before I've had a chance to get in.

So set a level that you want to buy at that leaves some room for profit given the current market conditions. Often shares will pull back after opening and you will get some that you might miss out on open. For example NCM pulled back to $30.40 during the day.

But most of all, be philosophical about not getting into every trade - there are several hundred other opportunities waiting for you over the next few weeks and months.

Hope this helps with your question.

dfshares

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Monday, January 19, 2009 - 10:09 pm:

Johno

At the start and the end of the day there is an opening and closing auction. It is held so that a fair price is established for the share given that there will be a range of buyers and sellers offering different volumes and prices. See the attached ASX educational material.

http://www.asx.com.au/resources/education/basics/open_Close.htm

ohkoolnutz

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Tuesday, January 20, 2009 - 08:28 am:

johno wrote on Monday, January 19, 2009 - 07:56 pm:
I want to get my order in ASAP after market closes, so im in line for the gap up if it happens, but if the dow is down again, i can cancel my order and try again the next day.

This is an impossible endeavour. You don't know there is the possibility of a gap until the gap has occurred at which time the trade has passed you by. By the time the DOW has risen on the open the gap in the individual stock will have occurred.

johno wrote on Monday, January 19, 2009 - 10:49 pm:
I cant quiet get my head around how it closes at one price and then opens at a higher level and there is no entry point available in between.

That is the character of gaps. The entry point of gaps has vanished by the time the gap has occurred.

---
ohk

Lies, Damn Lies and Technical Analysis

polpak

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Thursday, March 19, 2009 - 02:28 pm:

On ASX this not an impossible endeavour ;-)

Your orders need already be on the ASX before it shifts into opening/closing mode.

When it shifts into the opening/closing average price calculation mode you CHANGE your price on your order [Buy/Sell].

BTW this where best your broker does automatic adjustments for price changes on your order [Buy/Sell].

Some ASX data services do display as calculating the expected opening/closing average price.

To succeed you need be for a Buy to bid Higher, for a Sell to bid lower, than the average price calculated.

Warning: larger traders eager to finish particular trades can make changes which significantly vary the average; So best watch all this happen for a few days before you try.

Do go read the ASX reference on post from dfshares ;-)

ken

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Thursday, March 19, 2009 - 04:02 pm:

Polpak,

I don't consider that "after market trading". It is part of the day's trading - the market closes at 4:10 pm when this closing auction is completed.

Ken

captain_chaza

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Thursday, March 19, 2009 - 04:27 pm:

I tend to agree with you Officer Kenny

"After hours trading" is only there for "Fixing-up the Books in "their" favour on a Daily basis"

Crikey!
It is against the Law to fix the books in your favour on the following day!

It is as simple as that

Crikey!
How do you think a Broker/or Powered Attorney/Advisor can move Monies from One account to another after the Horse has already bolted?

It can only be done on the Past!

Salute and Gods' speed

PS Give my best to Officer Smallworld
Tell him "I miss him!"

"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.

"I believe the future is only the past again, entered through another gate."
Sir Arthur Wing Pinero 1893

"There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897