A "Kick Butt" IPO
Trading System that can Make 1 to 4 Points...
In A Matter Of Minutes!
Although investing in IPOs (initial public offerings) is not for the faint of heart or
the shallow of wallet, learning about the ups and downs of these fledgling and
not-so-fledgling companies can be an eye-opener for anyone. We've have written a tutorial
on how "WE" trade IPOs (initial public offerings) which you will find
below......
After several days, even weeks of HYPE a new IPO (initial public offering) will
be offered for sale to the public on Tuesday, Wednesday or Thursday (there are
exceptions). The OPENING of the new IPO (initial public offering) normally starts
mid-morning around 10 to 11 am EST.
Typically there are two directions the new IPO (initial public offering) will go once
officially placed on the Stock Market for sale. Straight Up or straight DOWN. The reason
is - during the Initial Offering of the new stock through the STOCK BROKER who is
controlling the Initial Offering - thousands of speculators are buying the stock at the
initial offering price with no idea how the IPO (initial public offering) will react once
it hits the Stock Market.
If these speculators (who bought the stock directly from the Stock Broker) feel the
stock market is showing little interest during the initial offering they may sell off
their stock shares at the OPEN – thus driving DOWN the price and forcing the new IPO
(initial public offerings) to sell off.
If these speculators feel the stock market is showing a lot of interest during the
initial offering they may HOLD their stock shares waiting for the stock to rise at the
OPEN - thus driving UP the price and forcing the new IPO (initial public offering) to
increase in price.
Typically within a short period of time after the opening, once it has moved either Up
or DOWN in a dramatic fashion, it will then correct - moving in the opposite direction.
Most of the time "IF" the IPO (initial public offering) is moving UP
extremely fast we may NOT be able to buy it unless we place what is called a MARKET BUY
ORDER. MARKET BUY ORDERS are very dangerous and should NOT be considered when dealing with
IPOs (initial public offerings)!
We place what is called a LIMIT BUY ORDER meaning "If we can NOT buy the stock at
the specific price (we want) then we will not buy it at all"... The reason we place a
LIMIT BUY ORDER is an IPO (initial public offering) can turn and go the other way in
seconds, losing 10% to 50% of their value!
If our Limit Buy Order is filled we follow the IPO (initial public offering) up
(placing a STOP LOSS LIMIT ORDER) of about 1/4 to 1 point, depending on how much the price
of the stock is RANGING. This protects us should the price of the IPO (initial public
offering) decide to fall right after we buy it!
We follow the stock as it swings up and should the BID PRICE STALL we execute a sale
IMMEDIATELY. Normally we can make from 1 to 4 points in a matter of seconds or minutes
following this IPO Trading System.
Sit - Wait - Watch & Be Ready To Pounce!
Should the price of the IPO (initial public offering) fall at open we sit back
and watch for the IPO (initial public offering) to rebound to the OPENING PRICE. If the
IPO (initial public offering) moves UP past the opening price we will consider a BUY,
depending on our Real Time Data Feed, Level II, the Stock Volume and the RANGING of the
IPO (initial public offering) between the BID PRICE and the ASK PRICE!
If the IPO (initial public offering) is moving UP so fast at the open we can not catch
a Buy Execution we hold off and wait for the correction. This normally is within 15 to 30
minutes from the open.
Once the IPO (initial public offering) bottoms on the FIRST correction it heads back up
on a smaller VOLUME. Depending on our Real Time Data Feed, Level II, the Stock Volume and
the RANGING of the IPO (initial public offering) between the BID PRICE and the ASK PRICE
we will attempt to execute another buy order.
Rookie Traders who consider trading IPOs (initial public offerings) MUST be educated in
"Reading Level II" and trade only 100 to 200 shares - until they establish at
least a 70% proven track record. To better understand how IPOs (initial public offerings)
react (when first coming to market) pull up a chart of several IPOs (initial public
offerings) on their first day and study how they move up and then down, or vice-versa.
Discipline is also extremely important when trading IPOs (initial public offerings). It
is easy to trade IPOs (initial public offerings) several times within minutes since they
tend to GO UP dramatically, then drop back dramatically. Greed is the major downfall of
all rookies trading IPOs!
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