Selling a stock at market open and it gaps down

[Martinref]

I picked a stock overnight that I wanted to sell. It was at 300 overnight so I set an order to sell at the market open. I was right but the stock dropped to 289 at the market open so thats what I shorted the shares at. They dropped to 285 during the day so the profit I made was a drop from 289 to 285 rather than 300 to 285 - how can you avoid this happening?

I hope someone who is good at this can help as its frustrating when I got it correct but didn't make any money!

 

[barjon]

I picked a stock overnight that I wanted to sell. It was at 300 overnight so I set an order to sell at the market open. I was right but the stock dropped to 289 at the market open so thats what I shorted the shares at. They dropped to 285 during the day so the profit I made was a drop from 289 to 285 rather than 300 to 285 - how can you avoid this happening?

I hope someone who is good at this can help as its frustrating when I got it correct but didn't make any money!

If your decision was based on what had been happening in overseas markets whilst your market was closed then your only option is to wait for the market to open and make your decision on the opening price. You might watch it fo a bit since the first reaction after an opening gap is often to try and close it.

If, however, your decision was based on an earlier assessment of the stock’s chances then taking a trade just before the close gives you the chance of profiting from any opening gap. ‘Course you might find the gap goes against you!

 

[tomorton]

If you set an order to enter at the open, you can't avoid the risk of an opening gap. You don't say what sort of order you set but what if the stock had gapped up? Let's suppose it gapped up to 311 - would you have still wanted to short at that price?

Also you will find the spreads wider than during the middle of the day.

There's an old saying in the industry, amateurs buy at the open, professionals buy at the close.

 

[Martinref]

Thanks everyone - I will either try and buy at the close or if it’s overnight news that has made my decision (most likely to happen) then I will wait to see what happens at the open. I had set my order up the night before to buy automatically at whatever the opening price was

 

[marcela 2020]

Thanks everyone - I will either try and buy at the close or if it’s overnight news that has made my decision (most likely to happen) then I will wait to see what happens at the open. I had set my order up the night before to buy automatically at whatever the opening price was

I hope you were lucky with it.