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Sunday, April 16, 2006

When to short? After hours or pre-market?

So I took a look at the data I have collected to date and came up with some numbers to look at about comparing the price after hours and the opening price in the premarket. I did this because I wanted to know if I am missing out if I wait until the pre-market to short. Now I only started collecting some of the info specific to this just recently (29 picks worth) so its not really info to make decisions on but worth a look. The after hours price that I am using is the price that the stock leveled off at during Cramers mention of the stock (after the initial few trades that are typically way too high). This of course would be the easiest time to short due to the high volume of buyers.

Of the 29 stocks:
11 of them opened lower the next morning by an average of .17 cents.
18 of them opened higher the next morning by an average of .18 cents.

So, in the end there is nothing wrong with shorting in the after hours even though the stocks do open higher more often then not (keeping in mind the limited data) because the price will come down at some point.

Of course it is possible to short at a higher price during the after hours if you are very fast with the shorting trigger finger and the results would probably swing in the favor of shorting after hours.

Personally I like the shorting during the pre-market. It means I don't have to hold overnight and risk news coming out late in the after hours or early in the pre-market (like DXCM). I can also take the time to read the message boards, check the short percentage etc to form a more rounded idea of what the price might do in the morning. I don't doubt shorting in the after hours is profitable, I just like to try to take out as much risk as possible.

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