Just some more of my naive insights...
I'll try to keep them brief .
Though I'm relatively new to BB's, and very
appalled by all the machinations, I think that
in some ways they behave like issues on other
boards, where I have INVESTED successfully for years.
Most of the shenanigans are pretty common sensible
if you just think about them. One really doesn't need
a degree or to have worked in finance to understand them.
So in very simple terms, let me address what I find to be the
most appalling aspect: the large gap between the opening
price and the previous day's close.
People are emotional, people are greedy, and too many just
want to make a quick buck (traders).
Some are also very naive. They see all the volume created by the
"churn", the transactions between mm's, get excited and jump
aboard what they feel will be a fast moving train to riches
without really knowing why they jumped in the first place.
These people feel they have to get aboard before the
train ZOOMS out so, after the previous day's volume, they
place their market orders for the opening bell so that
they feel they will be safely aboard before the train zips out.
Unfortunately, such unbridled enthusiasm plays right into the
hands of the mm's who have bid the price up in after hour trading.
What is after hours trading?
It is the continuation of trading after and prior to the bell on foreign
exchanges that are open earlier or later (due to time zones).
Only large players who trade volume can participate.
I'm not that large, so I've never done it and, therefore, I am not exactly sure how it is done.
The price is bid up above the previous day's close. All those
emotional types jumping on pay a premium for their shares.
The price than usually settles down to the previous day's close
before making a move in either direction.
If the gap or spread is big, a stock can go up for the day and shareholders who bought too close to the opening bell can still lose money.
Now if some mm's have a sell signal while the price is high on the
morning's enthusiasm about how this "baby is going to 10", et cetera.
these mm's really take advantage.
The people who just jumped on, without really knowing why, want
"to cut their losses" and panic sell. Thus a stock can tumble pretty quickly and the people holding the shares they actually had already borrowed are the mm's.
So what does this mean to you.
First, refrain from buying in the first half hour or
until you can, at least, better ascertain which direction
the stock is trending.
Second don't buy at market when there is a big
opening gap or big bid/ask spreads.
Third, know why you are buying a company. Sounds pretty obvious, but from the lack of real due diligence that I've read while reading some of these threads by so many, not only frustrates me, but makes me wonder whether some of you would be better offer purchasing mutual funds.
Anyway, this message will surely infuriate all the mm's who are still here trying to cover their short positions.
They don't want you to be informed.
Somehow some way they think they can dissuade me by calling me names.
To them I say...."sticks and stones will break my bones, but names will never hurt me"
Just for fun, I'm going to post this on GLOW too, so those invectives should really start to fly.
NEXT LESSON: Spotting mm's
|
