Just another little thought about trading in fast paced markets. Usually my opening execution in the morning is one that can set the stage for the entire day. Not because I may alter how I choose my entry and exit strategies but because I begin to develop my feel for the market and for particular stocks right from the get go. I always try to buy on the bid and sell on the offer but there is always a very good chance that it won’t happen
In the morning when I may want to go long a position I may test the market makers and not want to pay the offer. The market makers will open a strong stock at a level where they are going short in anticipation that after the initial buy orders are filled the stock may pull back. It may be at this point where I see the selling slowing down I may consider a point at which I may want to throw out a bid at or a bid slightly above the market makers bid. If you don’t get filled you may be able to determine that this stock is showing some strength and you may want to take the offer anticipating an upward move. In this scenario you pay the spread in order to catch a possible sharp upward move. Selling on the offer or a bit below is the same strategy.