_________________________________________________
Here's one of the only success stories I've had trading against an algo. Once i find i'm up against an algo, i usually take my loss, kick my wounds, and move on to another stock. I'm not posting this story to "boast", just hoping to spark a few of the more experienced traders to post a success story they have had against an algo, or how they trade against them. Several responding to this post say you can ride there coattails, or exploit them somehow. Feel free to send it to me as a private message if you don't want to post it here.
Here is mine:
I was trading AXP about a month ago. The stock was trending higher around lunch, the quiet time of the day. I tried to join in to its' trend, but every time i took a position, it turned against me. I went back and forth on it several times, in, stop out, in stop out, in, out, etc... Every single time I took a position it went against me. Not one of my trades got in the money by even a penny, even despite several indicators working in my direction. Then i just started trading it whichever way it went. I sat there in amazement as it switched direction every time i got into a position. I backed off on my size and let it keep hitting me for 3-10 cents on small shares. It must have gone on for 15-20 trades in a row, which i thought mathematically impossible, so i assumed it was either an algo, HFT, or the specialist playing with me. Whatever is was, it was right on top my trades and did not want me trading its' stock. I figured I would keep trading it in small lots just to see how many times it would actually switch on me. I thought to myself: "even though it's trying to chase me away from trading "its" stock, it had to be losing something on all the other traders coming in from the other direction". So i kept trading it for 100-200 shares, until it FINALLY gave me a few cents. My initial position was short for 100 shares, then 200. I was in the money, the algo or specialist was starting to give up. The S&P futures took a quick drop in my favor. The stock paused for a second as i watched for it to react. For the first time I SAW WEAKNESS in whatever it was. It was wounded, not from me, but from the other traders on the other side of my trades that were hurting it. It ticked down a few more cents in my favor, i saw blood, and went in for the kill. I started pounding it with 1000 share lots with almost every ounce of buying power i had. "It" didn't know i had in in me, but i did that day. After i had gotten all my money back and then some on the short position, i gave the Moth..er F..ker it's stock back for almost a 30 cent lower price and a huge grin on my face.
These algo's CAN break. I've seen it even as a somewhat new trader (1 1/2 yrs full time). Experienced big volume traders: Please share your success story with me so I can learn more on how you do it. I know what i did in the above example was unwise and somewhat risky (i was deep in the money on the trade as i averaged in, the stock was trading very thick, so maybe it wasn't that risky). Please show me how to do it the right way.
