{"id":484,"date":"2005-02-15T01:15:35","date_gmt":"2005-02-15T06:15:35","guid":{"rendered":"http:\/\/selfinvestors.com\/tradingstocks\/mail-bag\/frustrated-trader-dont-buy-gap-ups-near-the-open\/"},"modified":"2005-02-15T01:15:35","modified_gmt":"2005-02-15T06:15:35","slug":"frustrated-trader-dont-buy-gap-ups-near-the-open","status":"publish","type":"post","link":"https:\/\/selfinvestors.com\/tradingstocks\/mail-bag\/frustrated-trader-dont-buy-gap-ups-near-the-open\/","title":{"rendered":"Frustrated Trader – Don’t Buy Gap Ups Near the Open!"},"content":{"rendered":"

Question<\/strong>:<\/p>\n

I appreciate all the upgrades you’ve made to selfinvestors.com since I
\nstarted subscribing in July.  However, about the only thing I’ve accomplished,
\nsince resuming my active investing last June, has been to limit my
\nlosses.  After numerous trades, my only significant gain was 21% on DHB.<\/p>\n

I’m sure some of this resulted from poor decisions on my part.  But one
\nproblem is that, even if I could arrange to watch specific stocks in
\nreal time and\/or receive your buy & sell e-mails in a timely manner, my
\nday job doesn’t lend itself to making immediate trades.  With few
\nexceptions, I must make my buy & sell decisions in the evening or early
\nin the morning–before the market opens & before you send your buy &
\nsell e-mails.<\/p>\n

Last night I made another decision that is not working out well.  After
\nreading about OMM on your watch list, I researched it at investors.com
\n& other internet sites.  The fundamentals & earnings report seemed very
\ngood, and the stock was up nicely in after-hours trading.  I bought at
\nthe open today (with a limit order) and am already down more than 7%.<\/p>\n

I’m seriously wondering whether I should return to investing in mutual
\nfunds–which I don’t find particularly interesting.<\/p>\n

I’d welcome your comments.  Thank you.<\/p>\n

My Response<\/strong>:<\/p>\n

As far as the time issue I understand.  Other members have expressed similar
\nconcern about implementing this method successfully while maintaining a full
\ntime job.  It can be done.  I’m willing to work with you until you are
\nsuccessful if you’re willing.  You sound like you are.<\/p>\n

A couple of key things from what you are telling me:
\n1.  I think I have mentioned this a couple to times before in emails, but
\nnow I realize I haven’t highlighted this enough.  It is very important.  You
\nalmost NEVER want to buy a stock in the first half hour of trading,
\nESPECIALLY on a gap up after an earnings report.  In the first half hour
\ntrading, overnight orders are filled and there is much manipulation going on
\nfrom market makers.  You get a much more accurate direction of a stock after
\nthat first half hour.  In the OMM example, I was looking to pull the trigger
\nonly if it proved the breakout.  What do I mean by this?  It proves the
\nbreakout only if the stock clears the high that it made in the first half
\nhour.  The stock never confirmed a buy.  In your situation you probably
\nwould not have been around long enough to wait to see if it would confirm a
\npurchase – what you could have done is set a buy stop order above the high
\npoint of the first half hour.  The order will execute only if it clears the
\nhigh for the first half hour (you would just need to make sure that the high
\npoint of that first half hour would still be within 5% from the pivot, which
\nin this case I would have been).<\/p>\n

That is one strategy.  A safer strategy would be to just hold off on the
\nbreakout and wait for a return to the pivot area, which about half of stocks
\nwill do.  There is nothing wrong with holding off on the initial breakout
\nand waiting for the stock to return to an acceptable buy range (0 – 5% from
\nthe breakout point).  The Buy Watch screen lists stocks near a breakout, but
\nalso lists stocks that are still within an acceptable buy range.  For
\nexample, INFY remains in a buyable range, but I’m waiting for a drop to
\naround the 72 range before entering.  There is a good chance the stock could
\ndo this in the morning when you are able to watch or you could set a buy
\nlimit order at 72, so that your order gets filled if it drops to that point.
\nDOW is another great company highlighed that has been slow to breakout which
\ncould have been purchased this morning.<\/p>\n","protected":false},"excerpt":{"rendered":"

Question: I appreciate all the upgrades you’ve made to selfinvestors.com since I started subscribing in July.  However, about the only thing I’ve accomplished, since resuming my active investing last June, has been to limit my losses.  After numerous trades, my only significant gain was 21% on DHB. I’m sure some of this resulted from poor … Continue reading Frustrated Trader – Don’t Buy Gap Ups Near the Open!<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[],"class_list":["post-484","post","type-post","status-publish","format-standard","hentry","category-mail-bag"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/posts\/484","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/comments?post=484"}],"version-history":[{"count":0,"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/posts\/484\/revisions"}],"wp:attachment":[{"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/media?parent=484"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/categories?post=484"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/selfinvestors.com\/tradingstocks\/wp-json\/wp\/v2\/tags?post=484"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}