HSX Forum

Playing & Trading Strategy

Once people recognized it as a "pattern", it kinda became a self-fulfilling prophecy of sorts- the IPO bounce.

Posted by: Paul2k on May 06, 09:10 in response to Paul2k's post That's just the way IPOs have played since they switched...

First it was just people wanting to take their profits and run which caused other people to see the stock movement reversal and take their profits too, and then the stock tumbled. As traders saw that this was a trend (much like it is with daytraded stocks), people started to try to anticipate when the reversal would happen, whether it was based on time of day or price point hit and "jump the gun" or be the first to turn the corner before everyone else.

Sometimes the reversal sticks and it continues to go opposite of where it started out, and sometimes it drops just enough for the first traders to realize a second profit on the first bounce, and then reverse again to send it back in its initial direction. It's gaming the game, I guess.





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