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Another little "fact of life" premarket has always been, and continues to be
that a lot of action takes place from 7 to 8 AM. It has not been at all
uncommon for all but institutional investors using Instinet to be locked out
of 90% of the premarket move in equities. I've found most gaps occur before
any retail traders can get into the market at all. However, there is still
some volitility to be played out pre and post 8:30 hump time. At any rate, I
don't think we could ever have "too much" data. Terra-Nova now allows some
ECN trading from 7:30, which is too little too late.
Best regards,
Gene
P.S. - Sorry to have been absent for these past weeks, just moved and only
today got reconnected... sheesh!!
----- Original Message -----
From: "Bilo Selhi" <citadel@xxxxxxxxxxxx>
To: <TradeStationProWishList@xxxxxxxxxxxxxxxx>; "Omega List"
<omega-list@xxxxxxxxxx>
Sent: Tuesday, August 14, 2001 10:53 AM
Subject: Re: premarket quotes
> 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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