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Unfolding Nature Shop: Unfolding Nature: Being in the Implicate Order

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InvisibleLunarEclipse
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What Is Liquidity, and Why Is It Important?
    #22144558 - 08/26/15 05:36 AM (8 years, 5 months ago)

Liquidity is in simple terms, the ability to easily buy or sell something at a fair price at any given time to willing sellers/buyers.  This means that there are plenty of players on both sides of the market so that when one side wants to close their position, there is someone on the other side willing to assume the other side of that position.

Now, look at what happened just this Monday morning at the 1100 point down opening on our stock market here in the US.  Essentially, there were only sellers panicking to get out in a thin late August market.  The NYSE actually had to invoke Rule 48 to get the market open.  There wasn't even a pre-bid indication given for many stocks.

At the opening, many many stocks simply got hammered down.  Imagine having your Apple stock market order execute at 92 and in 5 minutes be trading at 102.  Really, there were no buyers all the way down from over 100 from the Friday close until it hit 92, then suddenly buyers rushed in and drove it back to 102 in 5 minutes?  Didn't take them "long" to go long.

In this era of no more market makers, specialists, who actually function as liquidity producers, and with Dodd Frank taking out the other liquidity from big institution trading, we end up with thin "vacuum" markets that move down at freefall speed.  Up, not a rush of buyers typically, more orderly, but down, everybody wants out at once, with nobody to sell to until the HFT algos kick in...


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OfflinegeokillsA
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Re: What Is Liquidity, and Why Is It Important? [Re: LunarEclipse]
    #22144798 - 08/26/15 07:49 AM (8 years, 5 months ago)

This is why active traders wake up before the market open and observe the futures.  If futures indicate a big gap open, it is almost always best to remove your stop orders and see how the opening rotation plays out.  You may end up selling for a greater loss, but in most cases, you see a bounce and can find a more favorable exit.  Interestingly, the NYSE's Rule 48, which allows market makers to skip the step of confirming the market open price on a stock (under the assumption that this will "speed up" the opening), has now been invoked for the third day in a row.  Frankly, I'm not sure why you would want to speed up market opening and neglect to confirm prices... seems like that just leads to additional chaos.


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InvisibleLunarEclipse
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Re: What Is Liquidity, and Why Is It Important? [Re: geokills]
    #22147357 - 08/26/15 04:02 PM (8 years, 5 months ago)

Quote:

geokills said:
This is why active traders wake up before the market open and observe the futures.  If futures indicate a big gap open, it is almost always best to remove your stop orders and see how the opening rotation plays out.  You may end up selling for a greater loss, but in most cases, you see a bounce and can find a more favorable exit.  Interestingly, the NYSE's Rule 48, which allows market makers to skip the step of confirming the market open price on a stock (under the assumption that this will "speed up" the opening), has now been invoked for the third day in a row.  Frankly, I'm not sure why you would want to speed up market opening and neglect to confirm prices... seems like that just leads to additional chaos.




With computers running at fractions of a millisecond, and supposedly electronic pricing to assist with price discovery, it's complete bullshit that somehow they are "speeding up" things by not having an opening market trade and print.  In other words, it's another means of avoiding price discovery and manipulating the market. I'm starting to really hate the NYSE.  F U NYSE.


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InvisibleAhab McBathsalts
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Re: What Is Liquidity, and Why Is It Important? [Re: LunarEclipse]
    #22149301 - 08/26/15 10:21 PM (8 years, 5 months ago)

Never buy or sell at market and always use limit orders. It worked great on tuesday's shit mess and my orders went through on the price I wanted; monday's close price. A dead caat bounce, absolutely, but there is plenty more cash to inject should the market head lower.

Markets are imperfect, people are irrational. Always.


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Unfolding Nature Shop: Unfolding Nature: Being in the Implicate Order


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