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Program Trading Stock
Selection How
would you like to know in advance, exactly which stocks will be bought by
program trading firms and which stocks will be sold by those
firms? Sound interesting? Here
is how we do it. Our
computers capture every large block trade in every stock in the Dow Jones
Industrial Average (INDU), S&P100 Index (OEX), and NASDAQ 100 Index
(NDX) every trading day. By capturing these trades (times and
sales), whenever our program trading premium execution levels are hit
today, we are able to determine exactly which stocks in each index
are being bought the most during buy programs executed by program trading
firms when our program buying premium execution level is hit; and, what
stocks are being sold the most during sell programs executed by program
trading firms when our program selling premium execution level is
hit. Since
we are constantly tracking all block trades in index stocks, it is
very easy for us to turn on our capture files whenever the premium reaches
our execution levels. If you would like to know today's exact
program trading premium execution levels that will turn on our capture
files for buy and sell programs then click here. Most
buy programs and sell programs are run in the next 6 minutes after our
premium execution level is hit. And unlike in the old days when most
program trading firms did plain vanilla index arbitrage, today's best
program trading firms do not blindly buy or sell all of the stocks in the
indexes in equal shares. They learned long ago that the plain old
arb game makes only a small amount of return. Of course that small
return is normal for transactions that have almost no risk. The
best program trading firms now weight their buy and sell programs.
They have learned that by taking just a little more risk, they can pick up
a heck of a lot more return. For example, if their own in house
research determines that a certain stock or group of stocks is going down
and therefore not attractive for purchase, they will rarely buy that stock
or group of stocks during a buy program, no matter how high the premium
goes above the buy program execution level. They will stay focused
instead on stocks that their research has determined is going up and
weight their buy program heavier in those stocks. We see the
results of this weighting every day when large blocks of certain stocks
are being bought in the indexes and at the exact same time no shares at
all of certain stocks are being bought. Conversely
if these program trading firms determine that a certain stock or group of
stocks is going up and not attractive as a short sale, they will rarely
sell short that stock or group of stocks during a sell program, no matter
how low the premium goes below the sell program execution level.
They will stay focused instead on stocks that their research has
determined are dogs with fleas. We also see the results of this
weighting every day when large blocks of certain stocks are being dumped
in the indexes and at the exact same time no shares at all of certain
stocks are sold short. A
quick comparison of our capture files from the past few buy programs and
sell programs almost always reveals the winners on the long and short side
of this program trading game. We almost always find that the stocks
or group of stocks that were not sold at all during sell programs, are the
same stocks that are going straight up the most during buy programs.
And that the stocks or group of stocks that were not bought at all during
buy programs, are the same bunch of dogs that are falling out of bed
during sell programs. Since
we are constantly tracking all block trades, we can also determine which
stocks are being bought or sold for customer facilitations and other
program trades, whether our premium executions levels are hit or not.
Although these trades are considered by some firms to be simple buy or
sell orders, and therefore not related to our program trading premium
execution levels, by tracking this information too, we are able to include
these stocks in our Program Trading
Stock Reports. Some
of the world's best traders and trading firms subscribe to our
reports. By knowing which stocks other program trading firms are
buying and selling the most, they are able to incorporate those same
stocks into their own weighting for buy and sell programs for the next
day. Since program trading now accounts for more than 55% of trading
volume on average, that is the main reason you see stocks go on a two or three day
rally. Or decline. Now
that you know how we do it, most likely it is time for you to take a look at
those stocks. So if you would like to know what stocks were bought
and sold by program trading firms lately, send us email
with your name, address, and phone number and we will email you the
private
URL for that report.
If you have comments or suggestions, please
email us at:
info@programtrading.com
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