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Article Archive For Don Bright

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. This month: What's The Crutch...

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. This month: It's all about volume...

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. This month: Market Liquidity And The Tick Size Pilot Program...

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. This month: Making Sense Of The Prognostications....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. This month: Automatic response order entry...

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. This month: Making sense of the prognostications, revisited...

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. This month: Rob Friesen, president & COO of Bright Trading, fills in again for Don Bright to discuss hedged strategies....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. This month: Rules, Rules, Rules: Do We Need To Follow Them?...

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. This month: Open Outcry, and IPOs & DPOs....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C.. This month: Hedge-fund basics....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. This month: Year-end plays....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions. This month: Setting up your computer screen(s) for trading....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions. This month: Trading setups and whether they are quantifiable....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions. This month: Indicators - what good are they?...

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions. This month: opening-only orders (OPG) and market-on-close (MOC) orders....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. This month, the topic is high-frequency trading....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions. This month: Order routing and rebates....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions. This month: The Volcker Rule and the cost to carry positions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions. This month: Advanced tools for trading....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions. This month: low-volatility markets....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions. This month: scaling in; risk vs. reward; share size & price of stocks; and adding shares to winners....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions. This month: Seasonality....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions. This month: What is the best investment?...

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions. This month: Short Selling and Qualified or Nonqualified dividends....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions. This month: Short Selling and Qualified or Nonqualified dividends....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Hi Don, I have seen many traders who post the Ny s e close imbalances in US dollars just after they have been released. Do you have any idea where they are getting this information? There must be a website out there posting them in real time. Thanks. --TradingNerd Actually, the market-on-close imbalances are published daily at 3:45 NySe time in number of shares, not US dollars. You can, of course, get a program to convert the shares to USd if you like. We get our numbers from our trading platform, RediPlus (Goldman Sachs), but you can also access them from news services ...

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions....

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions....

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...You have written about the tax advantages of being a professional trader versus a retail trader. You also mentioned something about mark to market accounting. Could you expand on these points?...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...LIQUIDITY, REST, AND ROUTING I see you have been posting about your firm's new approach to order routing that is saving or making your traders a lot of money. I remember you used to say "take liquidity on the NySe (or NaSd a q) and rest or leave your orders on ar c a." Could you explain the differences you see now? Could you start by explaining "take liquidity" and "rest" orders? Does any of this routing make that much of a difference? My broker advises me to use only market orders anyway, so how does this affect me? Wow, a lot of good and timely questions. First o...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...END-OF-DAY CLOSE IMBALANCES Mr. Bright, I attended one of your classes last year and found it very helpful. One of the things you taught was how to read and respond to end-of-day market close imbalances. If I recall, you said these imbalances were put out twice during the last half hour of trading. Is that still the case? Have there been any changes to your thought process regarding how to treat them? --Edwin G. Don, I want to thank you for your column and your help on the various Internet boards. You had posted at some point that there had been major changes in the ...

  • Routing Your Orders

    ARTICLE SYNOPSIS ...Changes in structure cause changes in order routing. And with growth and mergers taking place among exchanges, traders need to be aware of how to route their orders....

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Reversing The NegativeEffects Mr. Bright, thanks for your column, I read it every month, it really helps. A while back I read about how some of your traders have taken advantage of what seemed to be a negative situation. High-frequency and subpenny trades take place with more frequency these days, and I think you said something about how to reverse the negative effects. Could you possibly go into that again, please? --coyotejk Sure, let's start with a quick review of what we're addressing. Automated computer programs can and do send in high-frequency trading orders in s...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Don, I have a question about order routing that perhaps you can help me with. I trade with a respectable brokerage that caters to active traders. I've noticed in the last few months that I have been charged fees referring to "routing," "rerouting," and electronic communications networks (Ecn) fees. I place my orders to go to the Nyse, as suggested by my peers. I am told that there may be fees for taking of liquidity, and also that I may be entitled to collect rebates for providing of liquidity. I'm not sure what any of this means, but now that I'm being charged fees, I would like ...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...MIDPOINT TRADING WITH PENNIES Hey, Don, I had a quick question for you about midpoint trading. Not sure if you know the exact answer, but figured was worth a shot asking you. I have a buddy who trades Citigroup actively -- he just trades to make the spread. For example, C is bid offer 4.16/4.17. He works both sides looking to make the penny. So if he gets hit on his 16 bid, he looks to sell 17s. I told him his life would be much easier if he could sell the 16.5s (as there is always a ton of volume trading in between the spread). I told him it makes sense to work both...

  • Q&A

    ARTICLE SYNOPSIS ...Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions....

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...I know a guy who has been trading his own money for a few years now. He daytrades commodities/futures with claims of 4% a month with return on investment (Ro i) equaling 48% a year! With margin he can make twice that, he says. I'm confused because I've read and heard that some of the best traders make 20% per year daytrading, so is he most likely exaggerating? --Falcon This is a really good question, on several levels. I have been telling my traders over the last 30 years to focus on making consistent profits until they make their first $5 million or so, then they c...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...I have a bad habit of getting into trends too late. I try to keep an eye on stocks with strong correlation to the Standard & Poor's 500 with no outstanding news on them about earnings and so on. The indicators I mainly use are the S&P 500 and the futures tick chart. I also refer to the duck list frequently and look for at least five of the seven ducks to line up in addition to the other indicators. I also try to watch for resistance, but I still seem to take a position right before the stock changes direction. What am I doing wrong?...

Q&A by Don Bright

Q&A by Don Bright

Q&A by Don Bright

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright WHEN DO YOU ADD TO A POSITION? I'm an intraday stock trader. I've never had a problem cutting my losses, but I could use a little guidance when it comes to taking more advantage from my winners. I know one option is to add on dips. Do you ever add to a position if it starts working right after you buy it? -- JKlar Trading decisions are based on all the variables involved, not just the stock's price movement. One variable, of course, is the time frame the trader is accustomed to. If you are a short-term, high-frequency trader, then you may choose to take small profits, or lo...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright DIRECT NOT SO DIRECT? I've heard that my direct-access broker actually routes my trades through the firm. Can that be right? How is that direct access? -- TCmac I get this question a lot. Your order needs to go through the brokerage firm to verify that you have enough funds to cover the transaction, check for "pattern daytrader" compliance, and so forth. To get true direct access, the market participant must join an exchange or a proprietary trading firm. That way, your orders are covered by the broker?dealer directly, not your individual account. Hope this helps. SUBPENN...

Q&A by Don Bright

Q&A by Don Bright

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright FROM DON: TRADERS' PERSONALITIES Recently, I was asked about new traders' success. So often people think about all the technical information available and fail to appreciate one of the most important aspects of becoming a successful trader: personality traits. Personality has a lot to do with new traders' ability to grasp and properly execute market mechanics. What seems so natural to many long-term traders seems alien to novices. We try to explain what makes stocks move, and we try to show by example. Even with all this, a lot boils down to (yes) the personality of tho...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright SHORTING A SPREAD/PAIR Don, could you explain what it means to short a spread/pair? If a spread X-Y (where X is the long position and Y is the short position) is determined to be overbought and due for a pullback, the spread could be "shorted" by selling X and buying Y. To me this means that you reduce the number of shares of X (sell) and you buy to cover Y (since you are short). If you do this, then one action would cancel the other out, so what would be the benefit? How should this be done properly? Thanks. --dvaneyl5 To short a spread pair is just a definition. If I shor...

Q&A by Don Bright

Q&A by Don Bright

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright SUBPENNIES AND HIGH-FREQUENCY TRADING Don, I read your recent column about subpennies and high-frequency trading (S&C, March 2010). How have you and your traders adapted your order routing in the last few months? Good question. For the longest time we would advise our traders to "park" on an electronic communications network (Ecn) to collect rebates when they were waiting to be hit on a bid or offer. We would advise them to hit bids or take out offers on the primary exchange (Nyse, for example), since it was cheaper overall. Currently, we feel that it makes sense to do the...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright YAHOO OPEN Why does Yahoo! Finance list the opening price for the Dow Jones Industrial Average (Djia) at 8,146.82 when on the daily chart at 8:30 the price is 8,167? This may be a newbie question, but I sure would like to know. Thanks. --newtrader80 The opening price on the Djia is the same as the closing price from the day before. What happens is that you may see other data vendors using the 9:30 a.m. snapshot where perhaps a few Djia stocks have opened. A similar thing happens with individual stocks. You have what is referred to as "primary market" (Nyse, for example) v...

At The Close by Don Bright

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright POSITION SIZING IN STOCK TRADING How do you position size in your stock trading? I buy strong stocks above the intraday breakout with close stops. My problem is I feel that my initial price is important, and once I add shares, it changes the whole dynamic of the trade. I know that position sizing is very important (cutting losses, adding to winners), and being that my good trades last three to four hours, it's something I should be doing. Thank you. A couple of things come to mind. First, the actual intraday breakout price may or may not be a good entry. You really need to...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright IMBALANCES I've been watching end-of-day (Eod) imbalances to see what effect they may have on price and I can't find any pattern. Do market-on-close (Moc) imbalances mean anything? I read recently on Yahoo that in theory, a large buy imbalance would cause a stock to gap up at the closing price to accommodate the order and the reverse would be true for a sell imbalance, which should gap down the stock price. Traders would profit from the move with a buy imbalance by buying the stock right before the close and sending an immediate sell on close order. This way, the buy imbala...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...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 mark...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright BEFORE THE OPEN Don, I was wondering if you could answer this. I have heard that there is a data source that tells you the estimated opening of NYSE stocks before the open. Have you heard this? Thanks. -- Sky123987 I've not heard of any particular site, but I can tell you what we use. We see premarket imbalances (excess shares) of opening-only orders, and NYSE specialists sometimes publish an estimated opening price range as well. We also look at the electronic communications network's (ECN) trading levels, premarket. This helps considerably with our opening-only order stra...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright BREAKOUT/BREAKDOWN I've been analyzing breakouts from consolidation and wanted to get your feedback about the viability of a strategy I was considering. I posted this on an Internet thread a while back and got no response, leading me to believe perhaps no one actually trades this way. Yesterday, Pru started hitting the high ticker as it broke through the Hod and rallied to $22, where it then ranged between $21.75 and $21.99 for almost two hours before breaking through $22 and rapidly hitting $22.59 on the breakout. When a stock consolidates midday and trades within a tig...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright STOCKS OVER OPTIONS AND FUTURES? I've noticed over the years of reading your column in Stocks & Commodities that you and your firm focus on equities. I have limited capital and have been trying to learn options and futures for the leverage. Is there a reason you prefer stocks? I read somewhere that you used to trade options and futures.--Chad in Florida Good question! You actually gave one of the reasons I cite for not trading options these days. In general, retail options and futures trading is done because of limited capital. Please note, however, I have respect for my ma...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 27:01 (42): Q&A by Don Bright OTHER OPENING STRATEGIES? Are there similar strategies to the opening-only strategy for the close of the market each day? Anyone care to share the idea behind them or give me a place to research if you don't care to share? Thanks. --taclander First off, let's discuss market mechanics at the end of the trading day. All-day-long orders are submitted to the New York Stock Exchange (Nyse) marked as "market on close" (Moc). These orders will be given the last trade price of the day. These orders to buy or to sell are matched with each other u...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright DAYTRADING CRITERIA What time frame bars and other criteria are used for daytrading? --dafong Entry and exit points for daytrading tend to be determined by a couple of things. First, we look at the premium (PREM) or discount (DISC) to fair value on a emini tick chart. This will tell us when the money is going after the stocks. When futures houses can sell futures at a high PREM, they will hedge with underlying securities. This can be seen with any spreadsheet. Then we look to see where the peers are trading, which helps to determine the strength of the stock in relation to...

Q&A

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright NEWBIE QUESTIONS I started trading recently just to get my feet wet, but there are a few things that confuse me: 1. How do you know the total number of shares available for a particular stock? What determines the number of shares a company is divided into? 2. Where can I find balance sheets for specific companies, and on this sheet, how do I locate "growth stocks"? 3. What does "unch" mean? -- jasonrest...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright THE SHAPE OF THINGS TO COME I have been studying for my Series 7. So I'm studying up and learning as much as possible. What's your personal opinion for, say, the next five years in regards to the industry? Do you see any major changes coming that would affect the entire trading community? How do you feel about the future for pair strategies, open orders, and all that? I am seriously dedicating my life and future to this path, and I am curious what someone of your knowledge thinks will be happening in the next five to 10 years in the industry. Thanks. --Shane Hi Shane, good ...

Q&A by Don Bright

Q&A by Don Bright

Q&A by Don Bright

  • Stocks & Commodities V. 26:5 (67) Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright MARKET ON CLOSE What significance does the 3:40 pm ending order imbalances entail for daytrading? Also, can you recommend any books that will expound on the subject? Thank you in advance. -- Marcus MOC imbalances are fundamental to all types of trading. Suppose you're trading all day long, and you're long 2,000 shares at 3:30 or so -- you think you want to get out, but you might wait until 3:40 to see if there is a buy or sell imbalance. If it's a buy, wait; if it's a sell, sell immediately. Of course, you'll have to monitor each of your "children" (stocks you trade day in a...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright EXITING TRADES I've been trading for about a year. I've started using a combination of gray boxes, which keeps me focused and disciplined. My entries have been consistently profitable and timed well, but my exits have not been because I always sell too early. My most profitable system has been to pick the strongest 30 stocks every day, and by strong I mean what doesn't go down when the market is going down -- my gray box then buys them after 2:00 pm Eastern time on a moving average convergence/divergence (MACD) crossover with a midrange relative strength index (RSI). Right ...

  • The Russell Reconstitution: Plan For 2008 by Don Bright

    ARTICLE SYNOPSIS ...The Russell Reconstitution: Plan For 2008 by Don Bright Are there still profit-making opportunities in the Russell 2000? Find out here. There has been a lot of discussion about the "Russell reconstitution" and whether there would still be a good profit opportunity for professional traders. Some have opined the "edge is gone," but I am here to say, "No, it isn't." I have hundreds of traders, many of whom made excellent money using various strategies, all focusing on this event. RECONSTITUTION First off, here's a basic description of what we're talking about. Each stock market index is compo...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright TAPE READING ON THE INTERNET? I am a Chinese student who graduated from university four months ago. Now I have a daytrading job. I concentrate on the NYSE stock market and my trading style is scalping. So tape reading is very important for me. But I find it's hard to get this type of article from the Internet. I hope you can help me and send me some information to improve my tapereading skills (Level II and time & sales reading is the best, because I can't read the chart), or tell me how to find this sort of information. Thank you. -- lacan Okay, we teach "all-encompassing"...

Q&A by Don Bright

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright NOW IF Can someone tell me if all the assets of a company were worth $1 million and the total number of shares available for the full amount of the company were 100,000 (each share being $10) and regardless of the revenue, the company (always) returned 10% net on the $ million dollars each year -- that is, $100,000 -- at what price range would the company's shares trade the second year? How about the third year? Now if we take away the company's assets and say the company leases everything but total revenue was $1 million, with net income $100,000, at what price range should...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright MESQUITE RETREAT Hello, STOCKS & COMMODITIES readers! Bright Trading recently held one of our retreats for our traders in Mesquite, NV. We had approximately 70 attendees, including some "non-Bright" traders, who seemed to find the weekend both educational and entertaining. Traders asking other traders questions is always interesting and of great value to the whole group, including the Bright family. I'm going to paraphrase some requests and questions, along with a variety of answers. My request is for some informal presentations from traders -- just a few minutes from a few...

At The Close by Don Bright

Q&A by Don Bright

The Business Of Trading by Don Bright

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright NOT SUPER-FANCY Maybe Don or somebody else can tell me how to calculate S&P futures. I remember back in the early 1990s, one guy at the quote terminal would calculate it by having a Standard & Poor's 500 call and put option quote with the S&P 500 indicator. Somehow, you would subtract the price difference of one or both contracts and come up with a number (if it was less than 10, the market was discount, and if it was greater than 10, it was at premium) that would indicate an imminent sell or buy. It worked very well. Not only that, I want to get a real-time tick. I used t...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright IS AUTOMATION THE ANSWER? I've been trading for about seven months. I'm a good trader when it comes to entering trades and gauging the market's strength and direction, but I have no risk tolerance, perhaps because I don't have a lot of money in my account and I tend to butcher the trade (for example, I was in the airlines before the market yesterday but got out way too soon, and they were the strongest sector). I thought the best method might be to get an automated program that would exit my positions for me, thereby getting rid of the emotional factor that's killing my pro...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright IMPROVING A TRADING SYSTEM Don, what you think about a simple system like a moving average crossover system? I've played with different combinations (50/200, 30/100, and so on) in different markets (NASDAQ, Standard & Poor's 500, and others) with equities only. I got very good results with 30/100 in NASDAQ with money management, investing about 3% per trade. My profitable trades are somewhere between 40% and 50%. What you think about the system, and how do you think I should improve the trading system with additional indicators? Thanks. -- Sudhir Cheda Moving average tradin...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright BASIC SKILLS FOR DAYTRADERS Don, since you think (pure) daytrading is a limited style, then how do other daytraders make profits? Could you tell me some basic trading methods or skills for daytraders?-- Anonymous I'm not against daytrading, but I think other strategies can augment your income. Our new people learn how to do "open-only orders" (OPG) on the NYSE. We enter about 50 stocks, buys, and sell shorts, based on fair value calculations. Then, when a few of the stocks gap up or down, they are filled only when the specialist is filled. Why not trade on the same side as ...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 25:5 (44): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. BASING MY TRADES I don't know what to base my trades off since there is no specialist to follow. Are there guys still making money based on specialist prints? You ne...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 25:3 (62): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. SWEEPS ON THE NYSE HYBRID I was wondering if you could elaborate on this statement you made: "You need a nimble program that looks for five cent moves in a stock and...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 25:6 (43): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. FACTS OF (TRADING) LIFE I just started my second year of trading, and while I'm not making any money yet, hopefully I will be soon. Would you say that a negative stat...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright ABOUT THE PREMIUM INDEX I am from Argentina and I work in a proprietary firm. I have some questions about the premium index. First, is the premium Standard & Poor's 500 futures ? S&P 500 cash index or is S&P 500 futures ? S&P 500 cash index + FV spread? I understand that the premium is S&P 500 futures ? S&P 500 cash but in the web of my broker, you see that premium is S&P 500 futures ? S&P 500 cash index + FV spread. Which is correct? Second, do you use only premium when breaking program levels?--Sheik Both your definitions are correct. Certain data vendors use the PREM symb...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 25:1 (3): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. HEDGING THE MARKET I was reading about taking opposite positions at the same time and referring to that as hedging. Wouldn't that be the same as not being in the marke...

Q&A by Don Bright

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright BLOGGING ABOUT DIVIDENDS Basic question about dividends. How do they work? I have $2,000 to invest and I was wondering how the dividend yield relates to how much I am going to get. Do I get the dividend each month or quarter? Thanks--Anonymous If a stock has a declared dividend, it will have an "ex-dividend" date, which means that if you own the stock the night before this declared date, you will be paid the dividend amount multiplied by the number of shares you own. The payment will come in a couple weeks after the ex-date....

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright ON PIVOT POINTS AND DAYTRADING Is there any relationship between pivot points and daytrading? I believe there is, but I do not know what it is. Could you give me some help?--robinxing We use the pivot points of the futures in our entry/exit decisions during the day in this way: We consider the trading troughs between pivot and R1 or S1, S1 and S2, and so on, to be "mini" support/resistance levels. (We use resistance levels 1, 2, 3, and 4, and support levels 1, 2, 3, and 4.) They tend to be a self-fulfilling prophecy, since the large futures traders on the floor (and off) te...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 25:4 (31, 87): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. TRADE ADJUSTMENTS How do people adjust their trades if the market is expected to open higher or if the market is expected to open flat or lower? The night before,...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:9 (26): Q&A by Don Bright Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. PRICING E-MINIS Where does ES price come from? ES = (SPY price)/factor + time premium Now that I know that e-mini price is not direct, what bids and asks should I look at to detect ...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:10 (14-15): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. MARKET ON CLOSE ORDERS I do not quite understand the imbalance of NYSE and NASDAQ that you mention. Can you articulate?--Kwancy Sure. First off, the specialists a...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:11 (55): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. "OVERHEARD" CONVERSATION ONLINE NASDAQ and the DJIA keeps going up. As of today, the DJIA's another 16 points up and it's only 9:30 am Pacific time--it's like it's 1...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:5 (92): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. UNDERSTANDING SPOOS PREMIUM I have been researching the PREM ("premium") or spread between the SPOOS and the S&P cash index. I am trying to understand it better to he...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:3 (74): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. VOLATILITY & TREND Does volatility of a particular market have any correlation with its trendiness? Does increased volatility result in more trends or choppy markets?...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:6 (71): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. PROFESSIONAL VS. RETAIL Q: I have read some of your articles where you refer to "professional" trading, and wonder what that actually means. In addition, what is the ...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:7 (72): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. ZERO-SUM GAME OR NOT? Q: Could one of you academics who believe the stock market is a zero-sum game explain this idea? I think if you believe the market is a zero-su...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:1 (44): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. INTEREST RATES & STOCK SALES With interest rates on the rise again, I am concerned about how brokerage fees affect traders. My firm already charges a hefty fee for de...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:2 (19): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. FILLED ORDER SPLITS How do specialists determine the split on orders being filled? How many shares does each get, and does it depend on how the specialist feels that...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:12 (25): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. AND NOW, SOME DEFINITIONS Q: What are flippers? What do they do? Are they legal? And why are there so many people complaining about them? Thanks. --Richard Wong A:...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:8 (27): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. COMMENT TO JUNE COLUMN I was reading my June issue of S&C. I always enjoy reading your column very much. I wanted to respond to your reply to a question about whethe...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 24:4 (19): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. LOW-RISK PAIRS TRADING You've spoken of pairs trading with praise, and I think you have a group of traders engaging in this strategy. Can you suggest a way to start ...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:10 (53): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. DAYTRADING: MARK-TO-MARKET OR RETAIL PRICING? Why do daytrading firms mark-tomarket? Why not account for positions the retail way? I heard that retail firms like Am...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:11 (40): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. SPECIALIST STRATEGY I am interested in your strategy for calculating fair value, mentioned in the August 2005 issue of S&C. How can I get more info on this strategy...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:5 (43): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. BID/ASK EQUATIONS Q: Is there a mathematical equation to figure out the bid/ask price? How do computers handle that information? A: There is not really any mathema...

Q&A by Don Bright

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:6 (82): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. PRACTICAL ADVICE FOR NEW OPTIONS TRADERS Q: I recently started to look at options trading and am considering LEAPS in particular. As with everything else, I'm learni...

Q&A by Don Bright

Q&A by Don Bright

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:2 (80): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. TICKER While watching the ticker on CNBC preopening, I note most trades are in the hundreds of shares. After the opening, I note the trades are predominantly in the t...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:12 (34): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. TAPE READING Q: Here's a scenario for you: ABC stock is presented at 100.00 (56k) X 100.05 (100) All other factors being equal, for the sake of discussion, do you:...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 23:8 (21): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. MINIMIZING RISK IN PAIRS TRADING When selecting a portfolio of pairs to minimize market risk, what tools do you use to minimize or diversify away the specific risk? D...

Q&A by Don Bright

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...V. 22:9 (57-58): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. THETA DECAY I read that you were once an options market maker. I have a question about theta. Do you know when an option erodes due to theta decay? Is it continuous throughout the day...

  • Risk/Reward In Trading by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:10 (52-55): Risk/Reward In Trading by Don Bright Every investor and trader has been taught to be fearful of risk in the marketplace. That makes sense, right? You have to be cautious with your money, right? You have to limit losses, right? Well, maybe not. As in most other things, risk in the marketplace comes with a counterpart: reward. These rewards can be financial, physical, mental, or even emotional. We all risk so many things every day, from the moment we get out of bed in the morning, head to work in traffic, engage our peers in conversation, and otherwise ne...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:10 (47): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. ARBITRAGE AND VWAP For arbitrage (as with Bank One and JPMorgan Chase), you have said to use the "ratio" and "spread number" as a reference. What is the ratio? Is th...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:11 (87): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. ENTERING ORDERS Q: If one wishes to enter orders (buying or selling) market-on-open and/or market-on-close, what is the best way to achieve this on the various US s...

  • Cyber Market Chats

    ARTICLE SYNOPSIS ...Communication about the market may be our greatest strength these days, especially on the Internet. A professional trader takes a quick look at just a little of what's out there....

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...V. 22:3 (74): Q&A by Don Bright Q: Why are you so sure you will be on the same side as the specialist when using envelope orders? Would you please explain the basics about how you select your stocks (criteria)? When do you enter a trade (and when do you pull the order to avoid getting filled)? Finally, you say you have this automated. Does that mean you trade only the price movements of the particular stock? A: When you "envelope" the bid and offer, you are looking to take advantage of what we call trade-throughs. This is when the stock drops or rises an unusual amount to accommodate a large...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...V. 22:6 (59): Q&A by Don Bright ARBITRAGE With regard to arbitrage, I think I understand the reasons why someone trading from a retail account cannot realistically (or should I say consistently) capture arbitrage opportunities. Based on what I can gather, the barriers to entry for "the little guy" are: 1. Cost. This includes commissions but also includes the effects of the bid/ask spread for retail customers. 2. Speed of execution. This includes not only the ability to spot the opportunity quickly, but also the speed with which you get filled. Based on your experience, is this correct? Wh...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright PENNY ENVELOPE When enveloping intraday using the New York open book, would it make sense to place a bid (say, 200 shares) a penny above a really big bidder (20,000- plus shares) and offer a penny or so below a really big offer, in hopes of getting price improvement when (and if) the specialist cleans up those big blocks? Aren't the bigger blocks likely to be completed as negotiated trades (and therefore offer the opportunity for price improvement)? Is this a good way to place envelopes? Thanks -- Guy Truicko...

  • Price Vs. Speed by Don Bright

    ARTICLE SYNOPSIS ...Price Vs. Speed by Don Bright Here's a look at the order handling of the New York Stock Exchange versus over-the-counter equities. Over the last few months, I've been following the discussion, and even controversy, surrounding the best way to handle equities orders. In recent years we have seen the evolution of customer-initiated order flow. The Internet has opened up the world of trading to Main Street, and the increase in activity has spawned additional scrutiny into the way orders are handled. THE SPECIALIST AND THE OTC From a trader's perspective, I would like to discuss one of the tw...

Q&A by Don Bright

Q&A by Don Bright

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Stocks & Commodities V. 22:12 (20): Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C. PROGRAM TRADES I read an online chat that talked about programmed trades occurring on the Nasdaq. I don't trade that market, but found it interesting. It made me wo...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright TRADING PREPARATION Do you prepare for the day, or do you simply start trading? I've heard you mention that you respond to the market, but is that always enough? -- JS That's a good question, and sometimes I wonder if it's ever "enough"! However, we do our best to prepare our traders for each trading day. Our traders are connected each morning to a live chat that originates in New York, Vancouver BC, North Carolina, and Las Vegas. Four traders (me included) share the "numbers" for the day (support, resistance, pivots, and so on), and conduct a market commentary. By having m...

Q&A by Don Bright

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright OPENING ORDERS I have a question about stocks with news out pre-opening. Some say to avoid any stocks with news out; others say it depends what the news is. Regarding, say, earnings guidance announcements, I've seen times when a stock opens down two points on negative news -- and that's the high trade of the day. Then it goes down two more points. Other times a stock opens down two and then shoots right back up. These are dramatically different results, if you buy on the opening, and you obviously don't know in advance which of these scenarios will occur. How does this issue...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions. To submit a question, post your question to our website at http:// Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in future issues of S&C. ROUND TRIPS Without the morning play, how many round trips do you execute in a day? I'm just trying to get a rough estimate for what I should be trading. Thanks for your help -- Chris Bushell This is r...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright TRADING AT THE CLOSE My interest was piqued after reading your response in the July 2003 S&C detailing the REDIPlus order imbalances and how they can be used to trade at the close. Could you please go into a little more detail on how that works? How can I take advantage of those orders, since they are market-on-close/limiton- close? Aren't these orders executed too late for a nonprofessional trader to utilize for a quick scalpƯ? Thanks for your help....

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright FILLING ORDERS I have found your Q&A column to be the most helpful feature of STOCKS & COMMODITIES since I subscribed, and I look forward to it every month. Hopefully with your experience and knowledge you will be able to answer my question. I placed a short sale order of 400 shares of HDI five minutes into the open (9:35:33) on October 3, 2002, with my Internet broker. It was a limit order at 47.63. At 9:36:05 the bid-ask was 47.50? 47.71, last trade at 47.61. Shouldn't my short order of 47.63 show up? (I use eSignal and refer to time and sales data.)...CONTINUDED...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright BULLETS Do you know where I could find more information about the "bullet" options strategy involving married puts? Thank you -- Matt Bridier Married puts or "bullets" are simply contracts entered into between a trader, his firm, and another entity. Stock is purchased with an equivalent number of puts. The puts are exercised at the end of the trading day, leaving the trading account "flat." During the day, the trader can trade with the long stock, and can sell it without marking the sale short. This practice varies from firm to firm, and is generally only available to propr...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright DIVIDEND PLAY Do you know the exact time when dividend ownership is recorded? Is it at the close? For example, MO (Altria Group, Inc.) trades ex-dividend. Say the dividend tomorrow will be 64 cents. Could someone buy at the close, sell aftermarket, and capture the dividend (assuming they can sell it aftermarket near the NYSE close price)? -- vhehn First off, it is the overnight holder (settlement date) of the stock prior to the ex-dividend date who is eligible for payment. Afterhours trades are treated as same-day trades for clearing and settlement. It's a nice idea, but di...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright SPECIALISTS Assuming specialists make money and trading with them provides an edge, how do you feel about jumping in when the specialist is getting steamrolled? What tricks are in the specialist's playbook for a situation like that? Is he able to go short and cover lower, or is he getting longer and longer as the day drags on? -- kztd When a stock (or specialist) is "getting steamrolled" (which is rare), you will still see minor offset moves. For example, suppose that a stock opens for the day down a few dollars, but it still upticks a full 20 cents before heading south aga...

  • Survival Of The Fittest by Don Bright

    ARTICLE SYNOPSIS ...Survival Of The Fittest by Don Bright What do we do now? A new era in the market has dawned, and we have to figure out how best to adapt to it. Take a look around. The market bubble has burst, and we must learn how to adapt to the new era of trading the markets. There are new trading platforms, new ways to access the markets, and new products such as single-stock futures (SSFs) and narrow-based indexes. Traders must adapt to the new climate to remain successful. As a species, traders face the same dilemma that many of our ancestors did: we must adapt or become extinct. Although the penalty f...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright CONVERSIONS I'm new to options trading. Would you explain what a conversion is? -- Kelly, Cincinnati "Conversion" means the buying of puts and selling of calls at the same price, and also buying the underlying stock at the same time. Conversions are critical to valuations, because although calls or puts may look overvalued based on historical volatility, interest rates, and so on (option modeling), they probably aren't when compared to the full "three-way." If you look at the call, put, and stock, you will find that the net pricing will be near fair value (again, based on i...

Q&A by Don Bright

  • QA by Don Bright

    ARTICLE SYNOPSIS ...QA by Don Bright Is it possible to know when the specialist is bidding and offering stock during the day, aside from the opening or closing? In the book Day Trade Online by Christopher Farrell, he suggests that you can identify when the specialist is bidding and offering by looking at the bid and ask size....

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright TRADING NEWS There are a couple of news scenarios for which I would like your input. If a stock you play regularly has announced earnings since the last trading session, will you play it on the opening? If so, do you adjust the envelope for this symbol? What about earnings "guidance" and other significant news? Also, what about when there is no news on the symbol, but there is significant news or earnings on a stock in the same industry group or on the industry group itself? I understand that news is subjective and varies on a case-by-case basis. However, are there any rul...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright OPENING-ONLY ORDERS I've been following the opening-only orders strategy very closely, and I have a question. I'm a futures trader and somewhat unfamiliar with the practical aspects of trading listed. I watched around 13 opens this morning, and saw fills on three of them. One was LLY, which opened delayed? with news. The position would have been long in LLY at 56.50 to open. After a nice move to 56.80, I saw futures leveling off, possibly getting ready for more buying. But let's say a trader wanted to start unwinding a 2,000-share position at this point. Since the open, th...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright SEASONAL STOCKS Are you aware of any actual study on seasonal tendencies among stock sectors? I've heard the general market "sell in May and go away" and "buy tech stocks in the fall and sell in the spring" clichés, but I wonder what the facts are. I've heard that airline stocks are seasonal, for example. There are probably other generalities, which may or may not be rooted in fact. -- Steve Butler There are many adages in the stocktrading world, and yes, most are true -- some of the time. I suggest you pick up a copy of the Hirsch Organization's Stock Trader's Almanac, whic...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright TRADING DISCIPLINE I am a new proprietary trader about seven months in. I have started moving up the learning curve, but my biggest problem is discipline. I have great entries and I feel I have developed an intuition for when something is going to move; my problem is holding on to money and sitting on my losses. For example, today I had three great trades. My problem began when I traded a stock for the fourth time and was up another 0.25 when it started to rally against me. I could have easily gotten out with a profit but I decided to sit a little, and ended up giving back ...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright MONEY MANAGEMENT OF OPTION SPREADS What are some money management tips for credit and debit spreads? Specifically, when should I get out when a spread goes against me? -- Bob Maclaurin When you have a pure option spread in place, each option has a theoretical delta (percent equivalent to shares of stock; 100 delta = 100 shares of stock). So when a spread starts to go against you, you can do a few things. First, of course, you can get rid of it. Second, you can adjust your net delta position to near zero (plus or minus the amount of risk you want to take on the long or short...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright MARKET ORDERS I rarely trade listed issues. But I feel that exposure to this marketplace would be advantageous to my trading over the long term. Perhaps you could shed some light on just how the system works. I know the uptick rules -- it is the mystery of the book and its depth that confound me, I think. I used limit orders the last time I tried to short a listed issue (AXP). It was suggested to me then that market orders were the way to go when going short. Any insights would be appreciated -- Greg...

  • Strategies For Single-Stock Futures by Don Bright

    ARTICLE SYNOPSIS ...Strategies For Single-Stock Futures by Don Bright With single-stock futures ready to make an entry into the markets, you need to be armed with the right strategies. I 'm often asked what the traits are that successful stock traders have in common, and although there are many, what I find binds all good traders together is adaptability. We all thrived through the euphoria of the dotcom phase, and the Nasdaq's meteoric rise past common sense into obscenity. Many a genius was behind a computer when the buy-and-hold mentality permeated the shell of proprietary trading. Television analysts and on...

A Market Maker's Perspective by Don Bright

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright PAIRS TRADING I read your article and your Q&A section in STOCKS & COMMODITIES this month. In both, you referred to "pair trading." When I read that it was a strategy used successfully by your niece, I was intrigued. Would you please explain the strategy? -- Scott Memmott Many of our successful traders use one form or another of a "pairs" trading strategy. There has been quite a bit of research into the subject, and even an article in a previous issue of S&C. Let's start with the basic premise: Many stocks within the same or similar sectors tend to "track" one another -- tha...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright SINCE YOU ASKED Confused about some aspect of trading? Professional trader Don Bright of Bright Trading, an equity trading corporation, answers a few of your questions. NYSE VERSUS NASDAQ 100 I have been reading and enjoying your Q&A comments in STOCKS & COMMODITIES, and I found something that I would like to get further information about. I am retired from the US Navy and have been swing trading from my home for the last five years. I have been active in the market since the mid-1960s, but avoided active trading until I retired and had good access to the Internet, along ...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright OPENING FAIR VALUE I'm interested in what information or data is needed to calculate opening fair value for stocks, and how the calculations are made. Any help would be appreciated -- Matthew Murray We use the fair value (FV) number offered at www.programtrading.com (there are other sources, but I find theirs to be right on most of the time). We then find where the spot price of the S&P futures closed, add FV to it, and call this number "Spinx" (this is an actual symbol on some data vendors, like Neovest FirstAlert)....continuded...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright MARKET MAKERS AND SYMBOLS First, I want to thank you for your efforts in educating new traders. I've reviewed some of the information available at the NYSE and Nasdaq websites. There's a ton of material to learn from, but I still haven't figured out where to find the symbols representing exchange members or how to trace their end-of-day trading activities. Second, I have to confess that I speak as a naive equity trader from home with a three- to five-day perspective. I am trying to figure out the rules and participants on the playing field(s). Who are these players, what a...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright SINCE YOU ASKED Professional trader Don Bright of Bright Trading, an equity trading corporation, answers a few of your questions....

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright READING THE TAPE I've just finished reading some of your articles in STOCKS & COMMODITIES. Once again you illuminate topics that were unknown to me. I'm a novice trader in a proprietary program down on Wall Street, and I have been running into difficulty with this market (just as many others have). I have been trying different methods to see what might work for me. Recently, I have been employing a method that watches for size stepping up/down in stocks with volume on average between 80,000 and one million. I like this technique because I can clearly define my edge and beli...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright LEADING INDICATORS Every trader I have asked tells me to look at the leading indicators before trading. A friend told me he watches Intel [INTC] to see the direction of the overall market. Is this a good indicator? What do your traders use? -- edgetrader If you follow the money, as in many things, you will see a valuable leading indicator. Since there is more money changing hands in the Standard & Poor's futures pit (and e-minis) than the rest of the overall market, it only makes sense to follow the SPOOs (S&P 500). When there is premium to FV (fair value), the market will ...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright REVERSE CONVERSION In an article in STOCKS & COMMODITIES, a practice called "reverse conversion" was mentioned in relation to writing options. Would you expand on this? -- Adrian A reverse conversion, or "reversal," is simply a trade where you sell puts, sell stock, and buy calls, thus doing the opposite of a conversion. Reversals are traded by floor traders who get full interest on the short-stock valuation. ...continuded...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright LEVEL II TRADING I have been trading Level II for about three years now and did well until about a year ago. I know the market has changed considerably, but my main concern is the quotes themselves. Has something changed that I am unaware of?--Bret E., Denver, CO I find it interesting that most traders seem to feel that the market changed so dramatically last year. What was out of whack were the couple of prior years of the "bubble" in the Nasdaq. We simply went back to a more historical trading market, and those traders who adapted quickly were able to keep their streak g...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright TRADING IN FLAT MARKETS First off, I read your column every month in STOCKS & COMMODITIES, and I like how you answer questions directly without fluff. How do professional traders deal with a relatively flat market such as the one we have been experiencing for the last few months? In addition, I have noticed that the overall trading volume has been down for a while. Does that affect those who trade for a living?--Ben, Salt Lake City Thank you for the kind words! Good questions. I am asked the same thing almost daily, it seems. Those of us who trade for a living get used to a...

  • Three Traders by Don Bright

    ARTICLE SYNOPSIS ...Three Traders by Don Bright What makes them successful? What makes them fail? Here's how these three made it through the good times and the bad. When things are good, we often forget what the bad times were like until they hit again. When the bad times do hit, it's those who are diligent, persistent, and flexible who thrive. Impatience has no place. In past articles I examined the differences between professional, proprietary traders, and customers of a retail brokerage firm. This time, I would like to take you through the real-life experiences of three traders I know. You'll see what it tak...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright SINCE YOU ASKED Professional trader Don Bright of Bright Trading, an equity trading corporation, answers a few of your questions. INDEX ARBITRAGE Don, I have enjoyed your commentaries in STOCKS & COMMODITIES. Can an individual buy a "basket" of stocks economically enough (say with your firm) in order to perform index arbitrage: selling futures versus buying cash and vice versa? "Spread trading" or hedged strategies appeal to me; what valid spreads do you teach or trust, and can an individual perform S&P or E-mini arbing almost as effectively as the floor traders or market...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...EXIT SIGNALS I always believe that entry signals for trading are not so important compared with exit signals. Both "cut your loss" and "ride your profit" strategies are exit signals. What's a good strategy in terms of profit-taking signals? What criteria should I adopt in profit-taking mode?-- K.M. Lim, via e-mail We try our best to teach our traders to read the tape for both entry and exit points. Since we may go in and out of the same stock many times each day, we use minor intraday changes in our indicators for both entries and exits. Sometimes the best exit is actually a small loss (cutti...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...ARBITRAGE What is the difference between agency trading and market making? Also, is it possible to arb a large-cap Canadian stock such as Nortel (NT) for price discrepancies between the New York (NYSE) and the Toronto stock exchanges (TSE), or the Nasdaq and the TSE? A lot of times, I notice that they close at different prices after you factor in the exchange rate. Would it be possible to set this up at Bright Trading? I assume you would have to access two different accounts -- one in Canadian funds that gives you professional access to the TSE, and one in US funds that has access to SuperDOT....

  • Professional Stock Trading by Don Bright

    ARTICLE SYNOPSIS ...Is It For You? Professional Stock Trading What it is, what it is not, and how to make the leap! by Don Bright The term professional is sorely overused these days. What does it really mean? When it comes to stock trading, the answer is actually quite simple. A professional trader does not trade as a retail customer of a brokerage. The distinction, and all the inherent benefits, often make the difference between long-term financial success and failure. Please don't misinterpret what I am saying: I am not saying the difference is "professional vs. amateur" -- I am saying "professional vs. retai...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright TARGET PRICES: ABSURD? How do analysts calculate the target price for a stock? -- Doanh Nguyen, via e-mail That is something the world would like to know. There was an interesting 60 Minutes segment called something like "How Did So Many Get It So Wrong?" that showed how ridiculous it is for analysts to pick price targets. The producers even interviewed Mark Haines of CNBC's Squawk Box, who went into detail about a few analysts and their absurd predictions....

  • Becoming A Professional Stock Trader by Don Bright

    ARTICLE SYNOPSIS ...Becoming A Professional Stock Trader by Don Bright Are you interested in taking the plunge? Here are some of the things that you should know. It's important to identify the differences between professional trading and retail trading, particularly the need for Series 7 licensing. A couple of years ago, the powers that be decided that to protect both the public and professional traders, a method of distinguishing between the two had to be put into place. After much ado, the Securities and Exchange Commission (SEC) determined that an industry-wide exam would be utilized for the distinction. Rec...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright READING THE TAPE You often mention "reading the tape" in your articles. What do you mean by that? Please explain. Also, what trading software do you recommend? Thanks for your help. -- Moses Mannaa, via e-mail Reading the tape is probably the single most important talent traders can develop. Each trader has a dedicated ticker that shows every trade on each individual stock (one tape for each security). After you know the players and the things to look for on the tape, you can successfully identify short sellers (extremely valuable!), institutional buying, company buyback pr...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...TRADING NEWS STOCKS Since oil has been in the news lately, does that mean that XON and other oil companies are newsies and would not be good to trade? Or does the news have to be about the company directly before you would want to not trade it? -- J.L., Salt Lake City It is true we don't recommend trading "news stocks," but the news must be specific to the company. The opposite is true when underlying news (such as oil prices or the supply figures) will have a direct effect on stocks in several sectors (oil companies, oil services, distributors, airlines, and so on). The same is true for gold...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...NASDAQ STOPS Are Nasdaq stops possible?My broker tells me that you can't protect yourself on the downside by putting in a stoploss sell order if your stock is listed on the Nasdaq. Is that true? -- Lana Huddleston Good question. Since there is no actual marketplace with a single entity in control of the pricing of the stock, as there is on the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX) (specialist system), then who would be holding your stop order? Since the Nasdaq is a fragmented market (using many market makers instead of a single specialist), there is no practical...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright ON TECHNICAL ANALYSIS I happened upon the last part of your radio show while I was in Las Vegas recently, and heard you mention STOCKS & COMMODITIES. I picked up a copy and was pleasantly surprised to find that their focus has shifted somewhat from technical analysis. Although I find it interesting, technical analysis seems too complicated at times. Do you trade primarily with technical analysis? -- Ray B. Westwood, CA Since I pass many of my e-mails along to S&C, I want to thank you for reading what is probably the best book in the industry! Now to your question. I persona...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright PAIRS TRADING I read Stéphane Reverre's article "Pairs Trading" in the March 2001 issue, and I have a few questions. Do your traders employ this strategy? How is it best implemented? How do you pick the two stocks to trade? How do you determine which one to buy and which one to sell? -- Matt, Las Vegas We have been employing this strategy in one form or another for decades. We try to find two stocks in the same sector or group (such as tech, oil services, airlines, and so on). We then overlay the two prices back about six months to see the actual price differential. Actual...

  • Retail Trading Myths by Don Bright

    ARTICLE SYNOPSIS ...REAL WORLD Read This To Avoid Unpleasant Surprises Retail Trading Myths by Don Bright Besides being licensed, you have other hurdles and benefits to be aware of in trading with other people's money as well as your own. Last time, I outlined some of the primary differences between professional stock trading and retail stock trading. This time, let's explore some of the myths behind retail/online trading. Let me clarify a few things. In general, trading for a living involves 25 to 200 trades per day, and a daily share volume of around 60,000 and up. In contrast, retail investing is when you m...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...NEW TO OPTIONS I am new to options, although I have been trading stocks for several years. Does the technical analysis I use in stocks also apply to options? Do I need to change anything (such as the parameters of MACDƯ, RSIƯ, and DMIƯ) to adapt to the options market? Do you know of any website that provides charts of options? -- Richard Wilson, via e-mail Trading options is a completely different animal. My brother Bob and I spent more than a decade on various option exchanges (CBOE, PSE, CME), and we were around during the glory years. I say "glory years" because we were able to gain a trem...

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright Don Bright answers questions on trading journals, and deep-discount brokers....

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright Don Bright answers questions on how to create a Gann fan line, commodity options, and Smith indicator market timing....

  • Q&A by Don Bright

    ARTICLE SYNOPSIS ...Q&A by Don Bright Professional trader Don Bright of Bright Trading, an equity trading corporation, answers a few of your questions on choosing stocks, moving average offset, following the index, and trading in decimals....






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