Tony Oz: Short-Term Trading, Part II
Marc Dupee: Last time we spoke, you talked about pyramiding, stop-loss placement and how, in some of the more volatile stocks, it was impossible to get out at a decent price.
Tony Oz: There are trades that I’ve blown twice, or stop-losses that I’ve blown twice on the same stock on the same day! With one of them, it took 25 points before I was able to get out just because of the volatility. When they fall like that, there’s nothing you can do. You just sit there and pray that someone will pick your order. No buyers. And I was going out of market to get out. The second time, it was the same thing: I bought it again, and it fell again. This time, I knew I had to go way out of market, got out and the stock went down 20 points or so within three minutes.
If you’re trading with Nasdaq stocks, market makers are required to publish a firm quote, what they call “the firm quote” rule, where each participating market maker in that stock has to post a bid and an offer for the stock. So you’re going to have different price levels where each market is going to be at.