TAPE READING (chat room cont.)

[Maverick74]

Quote from dodger fan:

Maverick,

Do you usually have positions in most of the 15 or so stocks or is it mostly a small subset of those stocks that you initiates positions?

Usually all 15 stocks. BTW, I don't trade listed stocks anymore. I know I mentioned that on one of these threads, just thought I would reiterate that so there is no confusion.

However when I did, I usually had had positions in all the stocks on my screen at one point or another.

 

[Maverick74]

Quote from yip1997:

Let me see if I understand it. If the overall trend for a news stock is up (the stock has been moving up nicely), it means there is buyer. So when you see a double print, it means there are two aggressive buyers, and they might push the stocks higher later in the day. You will buy the stocks at around the price of the prints ( b/c you know they will buy at this price ).

However, if the stock drops below the price, will you cut your loss and close your position? When the stock drops below the price, does it mean that there is one seller bigger than the two buyers? How do you set your stop-loss?

I will set it around 2 cents below the price.

No, we are not looking at trend. I know it's easy to confuse the two. Because you must be thinking, if there is a buyer in the stock, then surely there must be a trend. This is 100% false. In fact, many times I would simply be in a stock the first 30 to 60 minutes because there was a buy or seller on the open and when they were done, that was it the rest of the day, the stock was nothing but chop. Your goal is to stay in the stock as long as the buyer or seller is there. It might be 5 minutes, it might be 5 hours.

All double prints tell you is that there are two buyers. They may not necessarily be aggressive. It could also mean there is a go along buyer. Also does not portend aggressiveness.

No, I do not look to buy stocks around the double prints, I look to buy or sell where I think the buyer or seller is resting. Where the double prints are is meaningless.

As far as where I would place my stops, I would place my stop at that resting spot where the buyer is. Not BELOW it!!!!!!!!

If the stock trades at or below where the buyer is, get the hell out of dodge! Usually you will not see a bid at his resting level. His level is usually above the bid price. You need to pay attention to this. Because if that bid gets touched, there will be an avalanche of sellers. Good luck getting out!

Now if that level breaks, that does NOT mean to get short! It simply means to get out. So many guys would think, oh, the buyer is done, time to short. None of those guys ever took home a paycheck. You only sell in front of an aggressive seller period! If there are no aggressive buyers or sellers in the stock, stay out of it, move on to the next stock.

 

[ilganzo]

Quote from Maverick74:

Now if that level breaks, that does NOT mean to get short! It simply means to get out. So many guys would think, oh, the buyer is done, time to short. None of those guys ever took home a paycheck. You only sell in front of an aggressive seller period! If there are no aggressive buyers or sellers in the stock, stay out of it, move on to the next stock.

...and this is a pattern that you'll see more and more often as execution platforms sharpen their tricks. Many, many times, when you think there is a buyer in the stock you'll suddenly discover that there is also a seller at the same price level. This is the best way to keep churning commissions. In part, this is due to automated trading that's constantly looking to sell into strength (to get a higher price) and buy into weakness. This technique works particularly well in low-vols markets. One more reason to make sure you're in the right stock all the time.

 

[ilganzo]

Quote from Maverick74:

As far as where I would place my stops, I would place my stop at that resting spot where the buyer is. Not BELOW it!!!!!!!!

If the stock trades at or below where the buyer is, get the hell out of dodge! Usually you will not see a bid at his resting level. His level is usually above the bid price. You need to pay attention to this. Because if that bid gets touched, there will be an avalanche of sellers. Good luck getting out!

In general it's time to get out but sometimes the specialist will print a small size at the bid without dropping the quote. It might be a trader or a seller who just wants to NX the bid.

 

[Maverick74]

Quote from ilganzo:

In general it's time to get out but sometimes the specialist will print a small size at the bid without dropping the quote. It might be a trader or a seller who just wants to NX the bid.

No, most of the time the seller will get price improvement. The specialist will usually never allow that bid to be hit because there are resting orders there.

 

[ilganzo]

Quote from Maverick74:

No, most of the time the seller will get price improvement. The specialist will usually never allow that bid to be hit because there are resting orders there.

I think if you NX you're not entitled to price improvements. Doesn't the NXing order go through an automated execution system?

 

[Maverick74]

Quote from ilganzo:

I think if you NX you're not entitled to price improvements. Doesn't the NXing order go through an automated execution system?

When I traded I did get price improvement on NX orders. Not sure if that is still the case today. In fact I remember how annoyed some traders use to be trying to hit a certain bid or offer to set stops off and they could never hit it.

 

[yip1997]

Quote from Maverick74:

The tape is the prints. When a stock price prints, that is the tape. In the old days of Livermore, there use to be a ticker tape. And the last price would print out on the tape. That is what you are looking at. Livermore would simply read the last price in those days. No bids or offers or time and sales.

The time and sales is a separate window. You should never have your time and sales window open during the day. How the hell could you watch more then a few stocks. You should be able to watch 10 to 15 stocks at least. There is not enough room to have 15 time and sales windows up. Besides, you will never see the information anyway. All you need to look at is your quote page, the bid,offer, last price, print, that's it.

Maverick,

Sorry for my ignorance. I went over your posts about double prints and tried to see if I could identify it.

How can you tell double prints by looking at the quote window. The quote window just gives you the last price, bid and size. I cannot tell there are two prints with the same size by looking at the quote window.

One more question.
Do you use charts? I don't think there are rooms for 15 charts.

 

[yip1997]

Quote from ilganzo:

Now by looking at the quotes right before the first double print you can see that the best offer is MSE, not NYSE. What the specialist is saying is this: "I'm not interested in participating in the sale of this stock but I'll buy 200 shares at 34.37". Now see how the NYSE bid steps up to 34.38 after the double print? I call this the strong quote. The strong quote steps up or down more regularly than the weak quote and always in front of the ECNs to absorbe as much stock as possible without showing his hand. The weak quote (in this case the ask) will jump up and down quicker to confuse traders and most often will stay away from the market. So now you have all the numbers in place to buy the stock (possibly inside the spread) and sit down and relax, right? Wrong, I wish it was that easy. The specialist will do everything he can to beat down the stock so that he can buy more stock from weak hands. He will wait, and wait and wait as long as he can: maybe a seller will step in or maybe the market will go through a pullback and he will take advantage of the weakeness to scare off traders. Of course, this is all relative to the overall strength of the stock. If there are tons of buyers on the floor, the specialist will be scared one, not the traders, and he will move his quotes like a charm.

 

[yip1997]

Quote from ilganzo:

Now by looking at the quotes right before the first double print you can see that the best offer is MSE, not NYSE. What the specialist is saying is this: "I'm not interested in participating in the sale of this stock but I'll buy 200 shares at 34.37". Now see how the NYSE bid steps up to 34.38 after the double print? I call this the strong quote. The strong quote steps up or down more regularly than the weak quote and always in front of the ECNs to absorbe as much stock as possible without showing his hand. The weak quote (in this case the ask) will jump up and down quicker to confuse traders and most often will stay away from the market. So now you have all the numbers in place to buy the stock (possibly inside the spread) and sit down and relax, right? Wrong, I wish it was that easy. The specialist will do everything he can to beat down the stock so that he can buy more stock from weak hands. He will wait, and wait and wait as long as he can: maybe a seller will step in or maybe the market will go through a pullback and he will take advantage of the weakeness to scare off traders. Of course, this is all relative to the overall strength of the stock. If there are tons of buyers on the floor, the specialist will be scared one, not the traders, and he will move his quotes like a charm.

So I think I have to show which exchange the print appears, which exchanges for both bid and ask too. I didn't show the exchange in order to save space when I traded.