From time to time, I receive an email from a subscriber telling me that they are unable to get prices on trade alerts that are as good as the ones I get.
There are several possible reasons for this:
1) Markets move, sometimes quite dramatically so. That’s why I include a screenshot of my personal trading account with every trade alert to reliably source the price for the readers.
2) Your Trade Alert email was hung up on your local provider’s server, getting it to you late. This is a function of your local provider’s lack of adequate capital investment in their own network and is totally outside our control.
3) The spreads on deep-in-the-money options spreads can be quite wide. This is why I recommend that readers only place limit orders to work in the middle market. Make the market come to you. Never buy at market or pay the offered side of the market unless you are in a stop-loss situation.
4) Hundreds of market makers read Global Trading Dispatch and many have attached algorithms to my service. The second they see one of my Trade Alerts, they adjust their markets accordingly. You may be fast, but you’re not as fast as an algorithm.
This is especially true for deep-in-the-money options. A spread can go from totally ignored to a hot item in seconds. I have seen daily volume soar from 10 contracts to 10,000 in the wake of my Trade Alerts.
On the one hand, this is good news, as my Trade Alerts have earned such credibility in the marketplace, with a 95% success rate. It is a problem for readers encountering sharp elbows when attempting executions in competition with market makers.
5) Occasionally, emails just disappear into thin air. We use cutting-edge technology, and sometimes it just plain doesn’t work.
This is why I strongly recommend that readers sign up for my free Text Alert Service as a backup. Trade Alerts are also always posted on the website as a secondary backup and show up in the daily P&L as a third. So, we have triple redundancy here. To sign up for the text alert service, please email support@madhedgefundtrader.com and put Text Alert Service in the subject line.
6) Options trades are now executed on 11 different exchanges. With two-legged spreads, one leg can be filled on one exchange while the second is filled on another. As a result, one online broker can show a spread trading through your limit other, while at another, it is ignored. I know this can be frustrating, but it is a fact of modern life.
The bottom line for all of this is that the prices quoted in my Trade Alerts are just ballpark ones with the intention of giving traders some name-picking and directional guidance. I pick the name and the direction and that is the heavy lifting when picking winning trades.
You have to exercise your own judgment as to whether the risk/reward is sufficient with the prices you are able to execute yourself.
Sometimes it is better to pay up by a few cents rather than miss the big trend. The market rarely gives you second chances.
Good luck and good trading.
John Thomas
