Good Friday Morning!

Its unemployment numbers day so that will have market focus and impact on yields so MLPS will have that on one side. No corporate news to speak of so far this morning. The GP of Energy Transfer Partners was IPO'd last night and begins trading today under the symbol "ETE". Valero LP, Atlas Pipeline and Buckeye will be going ex-distributions today. Scroll down to my last post from last night and read about the 10000 share (ten thousand) open market purchase by a Valero LP director. That is putting ones money where ones mouth is.

I discussed yesterday about putting my trading activity for the day. I am reluctant to do this if only because I dont want somebody getting screwed on my account. Let me start this off by stating a few things.

First off I've been successful (more winners than losers) because I have been very disciplined about the trading approach in MLPS. The premise is to try and exploit certain characteristics of trading regarding certain stocks. This is especially true of the Over the Counter MLPS which have a tendency to trade thinly and with wide spreads. The approach is to exploit those spreads and make some money. The other rule and this is most important...it requires you to sit tethered to you chair and watch trading pretty much all day long (okay piss breaks are fine..even a 45 minute trip to the gym as long as you have phone trading access.) Also crucial is execution. Does your brokerage firm you trade with give you great execution at the best price?

Other rules...rarely do i use market orders. I never use them before the open...and i only use them when i know the size of the bid or ask is equal to or greater than my position.

Okay lets begin with an example. Crosstex Energy (XTEX). The pre-opening bid and ask here is
34.50 x 37.02 which is huge. Want you want to do is buy as close to the 34.50 bid as possible with the idea of selling at a higher price later in the day. Or if you are long the reverse...that is sell as close to 37.02 (and of course above the price you bought it at). For my purposes today I will be trying to sell 1000 shares i got long late yesterday...purchased at 35.17. So i will lay an order near 36.50. If i wanted to buy i would place an order a little above 34.50.

Sometimes at the open you will have a large buyer or seller. Many times you will see a huge price swing with a big lot trade in either direction and you are there to exploit the situation. Bear in mind this does not always work and occasionally you get left holding the bag. I am willing to hold the stock for awhile if need be...so i deal in stocks that i don't mind holding.

Of course the trading can be so thin that you could wait all day or all week for that matter and accomplish nothing. Markwest Energy (MWE) is like that....trading so thin that when it does trade the market maker must celebrate openly. So you have to be careful which ones you choose. I am stuck holding this one right now.

Another thing to remember is to try to use MLPS that are either in uptrends or at worst moving sideways. It is alot harder and far more unnerving when they are in downtrends. This does not work well with NYSE MLPS...here the approach is different. Spreads being tighter the opportunity presents itself in a broader sense and one must be extremely nimble. Energy Transfer yesterday for example...i bought late Wednesday when it looked like the correction was over and tried to sell at the open...i missed my price buy 2 cents...then the stock dropped from 37.10 to 35.70 and then rally back to 36.94. The plan was to sell and then watch. As the second wave of selling developed i might have gotten back long at say 36. But the best laid plans of mice and men!

Anyway its a long post this morning and i will update as we go along.