Wednesday, January 23, 2008

Stock Lesson #1

I'm considering getting back into actively trading my online stock account and while I'm at it I figure I might as well post some lessons I am learning along the way.

Yesterday after the close of the market I decided I would like to purchase an ETF that shorts the S&P. I put in my order last night which would purchase at market price as soon as the market opened. This is a bad idea. The market opened way low this morning which means the price on my ETF was up. Since then the market has been rebounding to a breakeven point with yesterdays close meaning I have been losing money.

The lesson is never enter a market order to be executed at the open of the market.

Along with this is to never enter a position the first half hour the markets are open.

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