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 sspencer@smbcap.com

Disclosure: no relevant positions

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  • http://www.tradecrushers.com MattNadell

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

  • fffantom

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