Forum Archive Index - March 2000

["Wilfried Roding" <roding@xtra.co.nz>]

If a share is in a strong rally, it is often difficult to obtain the price
you expect, particularly with the placement of market orders before the
market opens. The pent-up demand creates an imbalance which drives the share
price rapidly higher on opening, sometimes only to see it retrace a few
minutes later (see AIA a few days ago - closed at 2.50, gapped to 2.55 on
opening, rocketed to 2.63, only to retrace to 2.55 a short while later).

If you are a trader or in for a quick buck, I would suggest that you set
yourself targets, eg:

If you think that SVY could reach say 0.090 in a day or two (this you can
assess from charts), your best raw profit potential would be about 34% if
you could buy at 0.067, which is unlikely. So, put in a limit order at
0.071 - this will reduce your potential profit by  6% if you buy at the
maximum, but controls your purchase price.

If you're too far behind in the queue, the opening price gaps over 0.071 and
the price does not retrace - tough luck. If you get a fill however (likely
in this scenario) and you put in a sell limit at say 0.089, you get a 25%
return - not bad.

I would not chase a share price, unless I am confident of a sustained rally.

Regards
Willi




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