Manual tape reading & DOM in an algo age

[777]

What is the reason someone /wouldn't/ trade that way?

Adverse selection on fills

 

[mbondy]

What is the reason someone /wouldn't/ trade that way?

I don't know.

 

[777]

What is the reason someone /wouldn't/ trade that way?

I think mbondy and a few other posters place orders resting bellow the bid and ask looking to catch a spike that clears out the first level, but I am not sure about this.

Many savvy traders no longer add liquidity by sitting on the bid or offer because they believe algos too often step aside and allow a fill when the price will go against them but step in front of them by a fraction of a penny to "steal away" an order if this looks like a good move.

To add insult to injury, if an algo takes an order away from you by stepping in front of you because the fill looks good, the algo will simply lean on your order for protection and sell you the stock if things start looking not so hot for the algo's position.
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Hoping mbondy and others comment!

 

[yiehom]

I trade stocks using the tape and level2 almost exclusively. I dont know how to trade without it.

When i started, i spent 5 months in a very realistic simulated environment, 8hrs every day, trading between 100-150 round turns per day. i lost a moderate amount of fake money and got really bad headaches often.

However, it was worth it.

I could go on at length about tapereading but suffice it to say it is possible, algos dont really make much of a difference. This style of trading is very intuitive and it helps to have a good understanding of market structure in order to be able to interpret what youre seeing correctly. That being said, the successful daytraders that i know personally ALL trade using the tape.

What is your plaform, if I may ask ?

 

[mbondy]

What is your plaform, if I may ask ?

Currently das trader, for lack of a better option. If I lived in the usa, I would use takion or lightspeed.

 

[mbondy]

I think mbondy and a few other posters place orders resting bellow the bid and ask looking to catch a spike that clears out the first level, but I am not sure about this.

Many savvy traders no longer add liquidity by sitting on the bid or offer because they believe algos too often step aside and allow a fill when the price will go against them but step in front of them by a fraction of a penny to "steal away" an order if this looks like a good move.

To add insult to injury, if an algo takes an order away from you by stepping in front of you because the fill looks good, the algo will simply lean on your order for protection and sell you the stock if things start looking not so hot for the algo's position.
_____

Hoping mbondy and others comment!

Yes I am generally always posting out of the nbbo but not for the reason you cited nor am I right above or below it.

I add liquidity because it is not economic not to.

 

[777]

Yes I am generally always posting out of the nbbo but not for the reason you cited nor am I right above or below it.

I add liquidity because it is not economic not to.

When you place an order levels outside the bid and offer do you pull the order if price drifts to the nbbo, or close?

Meaning, are you looking for large orders that clear levels to spike into you?

 

[mbondy]

When you place an order levels outside the bid and offer do you pull the order if price drifts to the nbbo, or close?

Meaning, are you looking for large orders that clear levels to spike into you?

I'm sorry but I don't really understand either of your questions. Could you rephrase them? How can price 'drift to the nbbo'?

 

[SoesWasBetter]

And all these automated types...they are all minting money?