Intraday Trading on First Day of Listing

ravi_s_ghosh · #1 13th January 2006, 11:11 AM

Hello friends,
I recently joined this site (not too old in stock market community too) and it seems there is a lot of material here to find out. I'm leaving another thread to which YOU, the "PRO TRADER",

can add lot of info...errr, rather valuable and helpful analysis for the enhancement of knowledge-deprived guys like me (after losing some part of my HARD-EARNED BUCKS on this kind of trade, i was on a look for some rules

).

Coming to the point. I was just wondering about the dynamics of intraday trading on the day of listing of the stocks. The major advantage in this is that you get a lot of volatility and the major challenge, to be on the right side of the volatility.

My observation is that within few minutes of market opening, the stock jumps quite a bit and then declines slowly. All this happens in first 1 hour of trade. The later course of the stock is still unpredictable to me. Also, if you, THE PRO TRADER/ANALYST, could put some light on the price pattern of the stock in relation with its listing price, PE, present day market conditions, subcription in retail and QIB segments, etc., and other known factors.

Thanks for reading... Hope you would spare some of your valuable time for me and other fellow stupid traders like me (who actually could not make anything of the Waren Buffett's 2 rules, rule 1: Never lose money. rule 2: never forget rule 1.)

ravi s ghosh

Ropewalker · #2 7th February 2006, 04:51 PM

Boss may I ask you something on trading in a stock on the first day of trading? Would you be able to tell what a baby would become at his/her birth? If you can then trade with a stock on the first day otherwise leave it on his/her parents to trade.

ravi_s_ghosh · #3 13th February 2006, 10:13 AM

Dear friend,

Stocks are not babies, first of all, and if proper analysis is done, one can even the future course of babies too (is some child psychologist listening.....). However, if you look at intraday chart of stocks on their first day of listing, except for a few exceptions, you would certainly agree with me.

Thanks for replay.

Ravi S Ghosh

AJAY · #4 16th February 2006, 11:15 PM

Dear Ravi,
You may use Open price mechanism for trading in the security on the first day of its listing. As the open price is rejected price, you may be with long position as long as the security is traded above the open price and vice versa. You may also look into the day's average traded price. If it is on strong bull hands, it should never come below the day's average traded price and viceversa. Sometimes, to get the stops triggered, the strong hands might run the price upto these levels. No worry. Get out and get in again in such circumstances with a cushion to the average traded price or open price.

Above all, plan the trade keeping the money management in mind. As you want to trade intraday, keep a check on greed factors and fear factors. Be principled. Adopt it and you will be the winner. Never allow greed to take control as long as you are on winning streak and fear factor as long as you are on losing note.
Happy trading
AJAY

ravi_s_ghosh · #5 20th February 2006, 09:30 AM

Hi Ajay

thanks for the valuable info that you have provided. But what is this rejected prize. I could not understand that.

thanks

ravi s ghosh
ravi_s_ghosh@**********

Traderji · #6 21st February 2006, 02:25 PM

I personally would not be comfortable trading on the first day of a stock being listed.

AJAY · #7 22nd February 2006, 01:36 AM

Dear Ravi,
The price that is not accepted by the market is rejected price. Generally Open price for any periodicity can be called rejected price for that periodicity. And Close price is accepted price by the market for that time being, in that periodicity. So, if the open price, which is rejected in the beginning by the market forces, is accepted again means generally all the move that happened in between has been rejected. So, likelyhood for the move in the opposite direction is more. Pl. make a note that there is no hard and fast rule that it should happen. Try to visualise what must have happened as the rejected price is accepted back.
There are several instances where the open price for that day has been hit several times. It means the security or any asset that is traded is struggling to have a direction.
If you want to trade intraday, I sincerely suggest you to be in the market only when smart money is in. Please don't become a compulsive trader. Don't stick to the intraday chart or terminal whole day through. You may get lost in the market wave. Spend more time on homework after market hours. Short list the securities to be focussed. Spend less time in the markets. Don't trade in stocks that have some announcements during trading hours. Have some principles for trading. Remember intraday traders are more exposed to higher risks than position traders in terms of number of hits by the so called Sharks.
Happy trading
AJAY

Prashant · #8 25th February 2006, 06:22 PM

Excellent post Ajay. Hope more such posts on practical aspects of day trading will come.

ravi_s_ghosh · #9 25th February 2006, 07:41 PM

Thanks Ajay for the post. I would be more helpful, if you could post an example trade of a day in any scrip that you had done with details of tick prize, average, open, low, high, etc, and your entry and exit prizes and what made you decide on those prizes.

thanks

ravi s ghosh
ravi_s_ghosh@**********

rangarajan · #10 25th February 2006, 10:22 PM

It would be more clear if Rejected price concept is explained with an example.
ranga

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