Trading Lesson #2: Don’t Trade Cash Takeovers

Dec 10th, 2011 | By | Category: General Comments, Steven Spencer (Steve's) Blogs, Trading Lesson
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Trading Lesson #2: Do not trade stocks that are purchased in an all cash transaction. There is very little intra-day movement.

Here is the chart for BCSI on December 9th 2011. It spent almost the entire day in a 5 cent range. Not exactly a treasure trove of opportunity for directional traders.

Steven Spencer is the co-founder of SMB Capital and SMB Training and has traded professionally for over 15 years. His email is [email protected]

Disclosure: no relevant positions

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  1. Agreed. The best trading is always during the takeover rumors and then there’s nothing to do when the actual takeover gets announced.

  2. sometimes there are opportunities even in all in cash, 30-50cents, not so volatile, but good tape and liquidity