All futures today. This video talks about my stock watchlist, and how I didn’t see any trades to take at the open. I also spend some time talking about why you should buy into big offers, and sell into big bids. Long-time readers will have already heard me say it, but it’s a common misconception in stock trading, so I think I should repeat it every once in awhile.
On top of what I said in the video, in stocks another dimension to the issue are so-called “iceberg” orders. The theory goes like this: A seller wants to sell 2 million shares. Are they going to put out an offer with a size of 2 million? No way… they’re going to issue shares a little at a time, only showing 1000 or less on the Level-II screens at any one time. Then, maybe when they have 10k shares left to sell, they might pick a price and show the whole thing… because they want to be done with it, and a large bid is a big invitation to sellers. So, in stocks anyway, you usually only see a big bid when it’s the last portion of a big buy order. Do you want to buy in front of a big buyer, just as they are about to stop buying? NO, you DON’T! You want to be a seller when the big buyer is about to walk away… So, that’s another reason to buy into offers and sell into bids. Of course, good timing helps a great deal…
