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business newsCaesars: The Art of Trading Day One of an IPO
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T3Live.com Feb 09, 2012 11:20 am
On the first day, all you have to work with is that day's price levels, so that's what you use to frame your trade.
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When trading the first day of an IPO, it is impossible to know what the stock is going to do. In trading, it is all about finding levels to trade against to define risk, and that can be done on any timeframe. On the first day, all you have to work with is that day's price levels, so that is what you use to frame your trade.
Caesars (CZR): The opening print after the halt was $13.00-14.00. Sellers and supply came in and took it lower in first 30-60 minutes. When supply meets demand, and chart turns up off lows, the aggressive trader will buy versus that low around $11.50ish.
When it triggers above the opening range, that shows real demand for that issue, so it turns into a buy above $13.00-$14.00. Above that level it quickly went to $15.00-$15.20 for cash flow.
It then retested the prior pivot, held, and then turned higher, providing a new trigger buy above $15.00-15.20 and that next move was exciting and took it as high as $17.87.
There were three triggers for cash flow. Some stocks take weeks or months to go from $11 to $17.90. A hot new issue can do it in hours.
If you simply learn how to maneuver an IPO on its first day based on intraday price levels, you can potentially have a lucrative trading on your hands.
There will be many more like this year, obviously including Facebook.
Check out T3Live.com's Virtual Trading Floor to follow these traders and their live portfolios on real-time throughout the day! Take a free trial.
Caesars (CZR): The opening print after the halt was $13.00-14.00. Sellers and supply came in and took it lower in first 30-60 minutes. When supply meets demand, and chart turns up off lows, the aggressive trader will buy versus that low around $11.50ish.
When it triggers above the opening range, that shows real demand for that issue, so it turns into a buy above $13.00-$14.00. Above that level it quickly went to $15.00-$15.20 for cash flow.
It then retested the prior pivot, held, and then turned higher, providing a new trigger buy above $15.00-15.20 and that next move was exciting and took it as high as $17.87.
There were three triggers for cash flow. Some stocks take weeks or months to go from $11 to $17.90. A hot new issue can do it in hours.
If you simply learn how to maneuver an IPO on its first day based on intraday price levels, you can potentially have a lucrative trading on your hands.
There will be many more like this year, obviously including Facebook.
Check out T3Live.com's Virtual Trading Floor to follow these traders and their live portfolios on real-time throughout the day! Take a free trial.
No positions in stocks mentioned.
