Let's talk entries

[candy7man]

One of the biggest questions I have had in my short trading career is proper entries and exits. Specifically for entries I used to do market orders on open if a stock looked good the night before (I am an end of day trader). Unfortunately fills were from good to horrible so I stopped using market orders completely. Now that I use limit orders I am still trying to figure out what is the best way to open? I have heard a lot of time 10 cents above the day's high but sometimes this creates the worse entries - placing me on the high of the next day on a red candle Or better yet the limit is too low for a small gap up the next day and I don't get filled. Then usually these missed stock are the ones that go on to move up a long way. I was wondering what people are using that works for them. I have though of using a buy stop limit order but I am not completely clear how they work.

[Stocktrading101]

Good call on not using market orders after the market is closed, market makers screw you over price wise the next day at the open price wise. Let's say the stock closed at $40 even and you want to take a position tomorrow but u wont be there, you are better off putting a buy limit order at $40.01 for after hours, and heres why. The following morning pre-hours if anyone wants to sell they will see they can get a better price than where the stock closed. So, you get your shares pre hours instead of at the open where u could get a price as bad as $40.20 or something... I do this quite often and it works like a charm, gets you away from the crappy price from a market maker.

As for buy stop limit orders, what you are combining a stop order, which is an order that only trigger when x parameters are met (for instance if the stock hits x price), and a limit order (which only allows you to get in at the desired price or better). So, using our example with stock XYZ closing at $40, if you put a buy stop limit order in at trigger price $40.40, buy limit price $40.40, this is what happens... Once the stock hits $40.40 (if it ever does), then your $40.40 buy limit order becomes active allowing you to get in at $40.40 or better.

Hope that helps.

[candy7man]

Great advice, as a general rule I have always kept out of after or pre-hours due to the lack of volume, spreads can be very brutal sometimes. Thanks for the clarification on stop limit buy orders, I guess they can be used to trade in the direction of your setup. Does anyone else practice the art of "buy on strength", which currently for me has not worked too well.