Q&A by Don Bright
NO STOP-LOSSES IN OPENING-ONLY STRATEGIES?
I have heard you say that you don’t like using stop-loss orders when you trade the opening-only strategy. Why is that? Most “experts” preach that you must use stops. Can you shed some light on this? —Chico
Sure, let me try to explain this often-confusing strategy, or lack thereof.
First off, you can check past issues of Stocks & Commodities to get an in-depth idea of what we do each day at the opening of the markets. To summarize, each day, Bright traders place buy orders and sell short orders on hundreds of stock prior to market opening. Each trader may place orders on from 10 to 200 different stock symbols. We have a methodology for determining the actual order pricing, based on estimated opening prices, overall market and so forth. We hope to get filled only on the stocks that gap way up or way down. We know that when stocks do that, the Nyse specialist will be on the same side that we are. If they are short, so are we.