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several more points to consider.
1.it is true that after and premarket liquidity is surely not equal to
daytime's
but you can unload a position if you trade within the ave liquidity
and not a price impactor type trader... ( which most of us TS users are )
in that case you have to factor in pre and after market trading
as you may lose your shirt on that action. remember that some stocks dropped
as much as 50% overnight and many more move 10-30%.
2. pre or after market trading is primarily even driven ie if there
is important information coming in early or late then trading interest rises
and brings
in more liquidity with it. this new information sometimes will affect your
current position, hence the necessity to manage it.
in some liquid stocks you can do thousands of shares pre and after market
when there is action.
in short if there is something happening in that stock the liquidity will be
there
and if you are trading within it then you can manage your position.
in those cases there are usually plenty of "get me out" profit taking orders
to get
you out too.
3. if you are large trader using TS ( talking thousands of share blocks ),
then the there is not much you can do overall and you will have to hedge.
and it is true that some stocks move well on almost no volume pre after
market.
those you have to isolate and hedge if you have large position and can't get
out.
4. pre market liquidity is ramping up from 7:30AM to 9:30PM whereas
after market liquidity is tapering off from 4:30PM to 9:00PM
all that is valid when there is there is new information intake and
trading
interest is present. those have to be factored in...
overall since most of TS users are small accounts and not the price impactor
type traders, adding the pre and after market bar data will help a lot in
managing overnight risk and it should be done...
bilo.
ps. if you are talking volatility and liquidity in general then
overall the volatility and liquidity follows cycle.
it's highest towards the end of the boom
cycle where every one is hero and daytraders "rule" the market and
is at the lowest at the end of the bust cycle where daytraders have their
tail in between their legs... which is what is happening now.
collapse in volatility is death for daytraders but not necessarily a bad
thing for pros...
no worry, there will be another boom cycle and another daytrading
volatility wave...no too soon though.
> Since we are moving away from 1999 and the first part of 2000, I wonder if
> pre and post market trading will remain hot enough to maintain the
> necessary liquidity needed to swing a fair amount of shares. Don't you
> think that stock liquidity will continue to fall to the point that there
is
> no point in focusing on pre and post market ticks?
>
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