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Selection Of Stocks Is Important |
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Many DAET traders are advisedly expanding their horizon to stocks other than the highly capitalized, higher-priced, and more widely held top 100 Nasdaq darlings. As more and more people come into DAET, they may not want to compete with the talented veteran traders and the most resourceful market makers who tend to trade these stocks on a more active basis. |
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Accordingly, newer traders may want to specialize their trading in less trafficked stocks. There is significant volatility in thinly traded issues that have come into prominence in the market over the past few years. While this can be a good opportunity for trading profits, the characteristic of these smaller-cap stocks is to show choppier price movement with far less real trading volume. If you are right, you can be very right; but if you are wrong, it can be a disaster. |
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DAET is now becoming a mainstream occupation. Since my last book, DAET traders have been fruitful and multiplied. The ranks of people participating in DAET have increased exponentially, now numbering into the thousands, whereas just over a couple of years ago the total number might have been only a few hundred. I believe the size of the DAET trading community will be tens of thousands by the turn of the century. Over the next few years DAET will become a desired and chosen profession, and traders will evolve into the de facto market makers of the future by bidding and offering in between the spread. |
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In the past year, the proliferation of DAET traders has significantly changed the ways in which DAET traders must think. The participants, many of whom are following the same group of stocks, often place identical orders at or about the same time in securities that seem to be moving in one direction or another. The multiplicity and speed at which these orders are placed often cause a DAET trader to have to pay up or sell down from the price the trader believed was the price at the moment the order was entered. For example, if six market makers were bidding for Microsoft at 117 3/8, and the perception was that the stock |
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