I had the pleasure of talking to a market maker last night at my local cigar lounge here in Birmingham. I dont know who he worked for, but basically he said what Ive been saying, all along with others on this forum for years now.
DAY TRADING IS DEAD.
http://www.wallstreetoasis.com/forums/schonfeld-securities-goodbye-letter-to-traders Take it from schonfeld, and learn to read the signs.
He told me that he knew people that made really good money back in the mid 90's and some of the early 00's, but most has lost everything, or a good chunk of it, and are now looking for jobs.
This guy also got short the credit crises back when it was at 106.40 on the DOW, and now has some properties that he picked up on the cheap in Tampa Fl. He bought them for 25 to 40,000 a piece...houses that used to be worth well into the 100's ok thousands.
According to him, hedge funds, and other large players, dont even care about the direction the stock goes...its ALL ABOUT tape volume for the ECN's... these guys get paid to provide liquidy to the ECN, and thats where a lot of the money comes from.
He also uses 30MA's, fibonacci, and other tools in his analysis, which kind of shocked me to hear..I thought he would have been strictly fundamental, but no. He didnt really say how he uses his indicatros BUT he does trade news from time to time.
The price of the stock is already priced in...the hedge funds know the news before the media does in many cases, and thats why you short good earnings, and go long on bad earnings
buy fear/ sell greed. He averages down/up on his trades also. I forgot to ask him if he only risks 3% which is the common rule for us traders.
If I see him again next friday, I'll try and ask him some more stuff.
