Q&A
Since You Asked
Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions.
NEWBIE QUESTIONS
I started trading recently just to get my feet wet, but there are a few things that confuse me:
- How do you know the total number of shares available for a particular stock? What determines the number of shares a company is divided into?
- Where can I find balance sheets for specific companies, and on this sheet, how do I locate “growth stocks”?
- What does “unch” mean?
—jasonrest
First off, you can go to finance.yahoo.com (or Google) and type in a symbol. Then go to “key statistics” to get the number of shares outstanding. To see how many shares you can buy, simply look at your quote window. It will show a bid price (where you can sell), an ask price (where you can buy), and the number of shares both bid for and offered.
To locate a “growth” stock, be sure you understand the term. Growth simply means not a “value” stock. With a growth stock, you’re betting possible future performance vs. established earning record. The term “unch” means simply that the price is “unchanged” for the day.
Good luck, be careful.
Trading premarket checklist
You published a basic trading plan in Stocks & Commodities a while back. Is it still available online? In addition, I have been testing the opening-only strategy that you have written about. I always seem to miss something, and although most of my trades would be profitable, one or two always seem to cause me problems. Can you suggest something to help me premarket?
—decko45
Regarding the basic trading plan outline, here’s a webpage that should help get you started: www.stocktrading.com/TradingPlanTASC.htm
As far as the opening-only strategy goes, I give my traders a premarket checklist to go through. Some of the checklist highlights can be seen here.
As you are filled, either click on “last” of the stock, or type in the symbol and click bid or ask to populate the price field in the quote window. Adjust the cover price to around five to eight cents profit, and then click buy or sell. Do this regardless of where the stock has moved. Make this default share size half of your opening-only order number of shares. If filled, place a wider profit target for the other half. Use the first cover price as a “mental stop” — try not to let the profits go away.
If the stock moves 10 cents against you, cover either all or half. Listen to the squawk box and look at the futures chart for market direction. Never let a stock move more than 20 cents without covering.
This is a basic plan for new traders and should be reviewed and modified as your comfort level increases. There are many automated programs available after you are comfortable with the basics.
Bright Trading Premarket Checklist
- Review news articles via Yahoo or other sources on your stocks and their sector.
- Check overnight and premarket activity.
- Listen to TeamSpeak (or other morning call) for daily information.
- Review Tradinginfo page for fair value and pivot points: See where the market is opening. www.stocktrading.com/Tradinginfo.htm (or similar page).
- Very important: Check for earnings announcements.
- Determine where you think the market will open.
- Put FV number on opening spreadsheet; remove any extra “news”—type stocks.
- Determine envelope for the morning. This will range from 0.5% to 1.5% based on where the market is opening. The farther from FV, the smaller the envelope.
- Send in “practice orders” by about 9:20 Nyse time.
- Use your opening Redi (or other platform) symbol list that is linked to Level 2 to see if you have bids or offers too far away from premarket trading prices. You can also link a spreadsheet to show premarket trading levels.
- Adjust prices as needed, or cancel.
- Either cancel everything and resubmit, or leave in orders with adjusted prices.