Stock Markets Exposed
Buying stocks after upgrades?
When companies like Goldman Sachs for example issue upgrades for stocks at 6:00 am, this is good news for a company as it means firms find valuation in the stock.. and the stock rises. Executing a pre-market trade and then selling the shares by the time the market opens. I have tested this with simulators and this seems like a fantastic trading strategy. Does anyone use this? any recomendations? experienced investors, what are your views? Hey, thanks to you both for your guidance so far. As for the drawbacks you mentioned, I already have had some possible workarounds to them that I havent mentioned... perhaps this would help: a) I am aware of low volume.. I wouldnt buy more than 1000 shares at a time if they wee available, and I would unload them shortly after 9:30 when the regular market is open. b) I would buy the stock right at 7:00 am, before the stock price has the chance to climb at all. Upgrades are released on the internet at around 6:30, so I would look at them at that time and decide which to buy. c) I preferebly look for upgrades with good news attached.. ie. earnings reports. Once an upgrade was issued for AMZN but at the same time, so was a downgrade. So I stayed away from that and it indeed did fall in price. d) I also watch prices and make sure the bid/ask spread isnt greatly differentiated. Going in early for the kill before the price rises is beneficial. I view premarket prices at NASDAQ.com
Public Comments
- Technically it won`t be that easy to get filled, and you won`t make money all the time. This concept has been known for years, but it does not work so well as it might look like. Check it with a small amount of real money for some period of time and you will see ups and downs of this technique by yourself.
- I've tried the technique that you mention, and it works better in theory than in the real world. Volumes are very thin in pre-market trading, and you will find it hard to get a good price to buy the stock, and even harder to unload the stock before the market opens at a good price. I have gotten lucky a few times with that strategy, but my losses outweigh my gains. Another problem with upgrades, by the time you hear of the upgrade, the price will already be built in then stock. Good luck.
