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Otherwise, I have to pay a little more for a limit order (an order to buy the stock only when it reaches a limit I have specified), not knowing whether the price I want to pay will still be available by the time my order is processed. But even this is changing, as at least one company is now offering limit orders at $5, the same as for market orders (rjt.com). |
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Online investors simply don't know where the stock is going to be in a minute without Level II information. And when you're trying to get the best possible prices, a minute into the future translates into a big advantage. |
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As we become more sophisticated online investors, we will all want the advantage that comes with Level II. When it is offered for very low cost or even free, all serious investors, even those who only trade a few times a year, will want the very best prices in getting in and out of a stock. They will no longer be as tolerant as they are now of giving such a big advantage to the market makers. In this way, longer-term investors are going to think more like day traders. In Chapter 10, we explore this thoroughly. |
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The Rush to Increase Trading Hours |
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For some time now, you have been able to trade after normal market hours. Two online brokerages, Dreyfus and Discover, began the new wave, joining forces with an after-hours market site (www.marketxt.com), initiating extended trading for the online investor. And many other online brokerages have jumped in to offer the same advantage. This means that those on the east coast who have accounts can trade from Monday through Thursday from 6 to 8 P.M. |
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Perhaps more significantly, those on the west coast can enjoy trading from 3 to 6 P.M. in the afternoon, during what are still normal afternoon business hours. My prediction: Within no longer than six months after this book is published, some form of trading will be available 24 hours per day. |
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This new development is important because it means you can trade on news at the close of the market rather than be forced to wait until the next morning. This is one more way the individual online investor gains more equal status compared to professional traders, who have enjoyed this privilege for some time. |
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Although there may be some problems related to fair bid and offer spreads (the difference between buy and sell prices are too far apart) and a possible lack of volume in the after-market, these issues |
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