Spreads

Hi,

I am still a novice at spread trading so apologies for nieve question.

I currently am interested in placing a buy on a share which has a spread 128-131 when the markets are closed and 125-136 during the day. If I put an open order to open at say 131.5 and the order rises then will this be fulfilled ok ie.. at the lower spread value and therefore not affected by the higher spread during the day?

Many thanks

Also, what are the reasons why the spread is narrower during the evening when market is closed?

thanks

williamsf1_fan said:

Also, what are the reasons why the spread is narrower during the evening when market is closed?

thanks

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I'm surpised it is.

I think the movement of price generally is more important than the spread.

That dont sound right to me, check again M8

spread

movement of price more important than the spread ????????????????????

Unless you are scalping, ignore the spread (well, keep it in the back of your mind obviously but don't make your decisions based on it). Trade at the correct prices. Enter and exit as per your strategy.

Sometimes waiting for a time with a better spread can result in losing points anyway that you would have gained by entering the trade. In which case, you are better paying the spread.

Also i doubt very much the spread is smaller at night time. As the other posters have said, check this. It's usually smaller during the day, which coincidentally, is also the best time to trade.

Prices within a day move mostly in a random fashion. A comparison of currency charts with stock charts reavaveals that pretty clearly.Sticking to strategy should be the principle.

jeffsmith said:

Prices within a day move mostly in a random fashion. A comparison of currency charts with stock charts reavaveals that pretty clearly.Sticking to strategy should be the principle.

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I absolutely do not accept that.
IF the markets were random then no day trader would make money. It would be like playing roulette. Infact, you would probably be better playing roulette- more fun.

And you state that 'sticking to strategy should be the principle'. If the markets are random a strategy will not work. It's like all the no-hopers that go into the casino day after day to practise their martingale doubling up strategy in the hopes they can win. What a load of rubbish.

If you want an example of the non-randomness of markets... look at breakouts. Or reactions to big news events. If the market was random, why when the US economy is going through big problems does the DOW fall so much? Surely it could have just carried on going up if it was random?

Of course the reply was in regards of the present market conditions which is more than anything random.It is getting tough to trade for genereal investors.

random?

jeffsmith said:

Prices within a day move mostly in a random fashion. A comparison of currency charts with stock charts reavaveals that pretty clearly.Sticking to strategy should be the principle.

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What a strange statement ?
as uktradegirl said, if it was all random what would be the point in a strategy. I agree a trading strategy/plan is important, but consideration to market movement, sentiment news etc is also important, if it were all RANDOM we may as well all pack up and go home>

ibex666 said:

What a strange statement ?
as uktradegirl said, if it was all random what would be the point in a strategy. I agree a trading strategy/plan is important, but consideration to market movement, sentiment news etc is also important, if it were all RANDOM we may as well all pack up and go home>

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It will appear random.....but quite obviously its not. Its just the way every one trades that's random.