TAPE READING (chat room cont.)
- Thread starter shortseller
- Start date
If the bid stepped up (is a fresh bid), I would look to nx the .05, buy market and push the stock higher. Maybe even place a bunch of bids in front of the big bid to show strength, then i'd probably peace out as other daytraders jumped in.
If the bid is at the low of the day or stale and has been sitting there for awhile and the stock has been creeping back down to that level, I'd look to smack the bid when the opportune moment sets up.
Of course everything depends on a whole bunch of other variables and also how you trade. I personally like to wait for the right setups (ones I have identified as high probability) and create the momentum and look to either clip out if the momentum dies, or keep upticking (or downticking) if I feel the buyer (or seller) has gotten aggressive.
If the bid is at the low of the day or stale and has been sitting there for awhile and the stock has been creeping back down to that level, I'd look to smack the bid when the opportune moment sets up.
Of course everything depends on a whole bunch of other variables and also how you trade. I personally like to wait for the right setups (ones I have identified as high probability) and create the momentum and look to either clip out if the momentum dies, or keep upticking (or downticking) if I feel the buyer (or seller) has gotten aggressive.
Agree.
BTW, with 100.05 (100) you can't really NX. When the NYSE best size shows 1 (100 shares) the NX is closed. Also for stocks trading 5M shares/day I wouldn't rely on 56k.
In some cases the NYSE market size doesn't mean anything. The specialist flashes a fake large size just to scare traders out. Watch X (united steel), he does that all day.
by the way, how often do you see a 56k share bid or offer in a $100+ stock? Most stocks of that price hardly ever show anything that close. As a matter of fact, I'd be a little skeptical if I saw that size showing up in the Open Book on those pricey stocks, might be someone messing around or trying to take the other side and quickly pull it away before he can get hit.
Oh, you are right. I didnt realize the example only had 100 shares on the offer. I just thought it just said that .05 was the inside. Well, in that case maybe i'd just buy 500 market, see where he fills me and then either buy more aggressively if I liked the print or re-evaluate before buying anymore shares.
The answer is E: Not Enough Info.
I was in the chat room this morning and myself and Nitro were discussing this with shortseller. I explained to shortseller that his tape reading skills were severely lacking. Although I don't trade listed stocks anymore, for 2 years I did and was quite consistent with it. I tried to explain to shortseller that size bids are there to be hit and size offers are there to be lifted.
True, in this situation he did not provide enough info. If that bid was stepping up and the stock was strong and near the high of the day, it might very well be a buyer. However, when there is a real institutional buyer or seller in a stock, they never show their hand until they are almost done.
Think about it, a real buyer is not going to say to the world, look at me, I have so much stock to buy, please lift all the offers so I have to pay up to get my stock. No, he is showing that bid because he has been buying the stock all day with no bids and now, that is all the stock he has left and wants to get hit. And he will get hit.
I told short seller, I use to love to see those bids. I would sell into them hard all day long provided the stock was weak and I knew there were sellers in the stock.
Trying to buy stocks with large bids and sell stocks with large offers is what we use to call a mook. A mook is an idiot that jumps in front of size only to see that size hit and then quickly is sitting on a losing trade. When I daytraded listed stocks, I use to look for patterns for the buyer and the seller. This took me months to learn how to do. Most of the time, especially with small and mid cap stocks, you would see 100 shares on the bid or maybe 300 shares on the bid, and it would be stepping up all day long. You never see the bid get hit, or if you did, you would see 300 shares bid, then 2k shares would go off at the bid and he would still be there with 300 bid. Very classic. This guy has a lot of stock to buy. And he would never show his hand.
When a large offer would show up, the mooks would quickly run to sell. The buyer would be there or the specialist buying all the cheap shares from the mooks. When the mooks were done selling, the 300 share bid would step to the size offer and suddenly the offer would get lifted in one print, bamm, gone. Now that 300 shares is stepping up again and the mooks are all bitching about how the stock is manipulated. This would go on all day every day. The mooks would never learn.
Like I said before, in this example, there is not enough info to go on. If the stock is strong and near the high of the day, I would be looking to buy the stock. But in general, even if the stock is strong, if he is showing size, it means that is probably all he has left and he will be done and the stock will trade lower the rest of the day.
Remember, the reason the buyer is showing his hand is because he has already bought all his stock. He will never show his hand if he still has stock to buy. Would you? Now I know what some of you guys are thinking, I'll just buy the stock and put a stop on the bid. OK fine, you and the other 10k daytraders out there all have your stops on the bid. You guys know what a stop is right? It means when Goldman comes in to hit that bid for the whole size, your orders are not filled yet. Now the stock is going into free fall and you have a sell market order out there. I can't tell you how many times I've seen stocks gap down .50 in this situation. If you think you are going to get any of that bid you are nuts. You are not going to get a single share. You will be filled down .50.
Anyway, that is my response to shortseller. I'm sure Don Bright or others on this board that have any kind of tape reading skills will say the same thing.
True, in this situation he did not provide enough info. If that bid was stepping up and the stock was strong and near the high of the day, it might very well be a buyer. However, when there is a real institutional buyer or seller in a stock, they never show their hand until they are almost done.
Think about it, a real buyer is not going to say to the world, look at me, I have so much stock to buy, please lift all the offers so I have to pay up to get my stock. No, he is showing that bid because he has been buying the stock all day with no bids and now, that is all the stock he has left and wants to get hit. And he will get hit.
I told short seller, I use to love to see those bids. I would sell into them hard all day long provided the stock was weak and I knew there were sellers in the stock.
Trying to buy stocks with large bids and sell stocks with large offers is what we use to call a mook. A mook is an idiot that jumps in front of size only to see that size hit and then quickly is sitting on a losing trade. When I daytraded listed stocks, I use to look for patterns for the buyer and the seller. This took me months to learn how to do. Most of the time, especially with small and mid cap stocks, you would see 100 shares on the bid or maybe 300 shares on the bid, and it would be stepping up all day long. You never see the bid get hit, or if you did, you would see 300 shares bid, then 2k shares would go off at the bid and he would still be there with 300 bid. Very classic. This guy has a lot of stock to buy. And he would never show his hand.
When a large offer would show up, the mooks would quickly run to sell. The buyer would be there or the specialist buying all the cheap shares from the mooks. When the mooks were done selling, the 300 share bid would step to the size offer and suddenly the offer would get lifted in one print, bamm, gone. Now that 300 shares is stepping up again and the mooks are all bitching about how the stock is manipulated. This would go on all day every day. The mooks would never learn.
Like I said before, in this example, there is not enough info to go on. If the stock is strong and near the high of the day, I would be looking to buy the stock. But in general, even if the stock is strong, if he is showing size, it means that is probably all he has left and he will be done and the stock will trade lower the rest of the day.
Remember, the reason the buyer is showing his hand is because he has already bought all his stock. He will never show his hand if he still has stock to buy. Would you? Now I know what some of you guys are thinking, I'll just buy the stock and put a stop on the bid. OK fine, you and the other 10k daytraders out there all have your stops on the bid. You guys know what a stop is right? It means when Goldman comes in to hit that bid for the whole size, your orders are not filled yet. Now the stock is going into free fall and you have a sell market order out there. I can't tell you how many times I've seen stocks gap down .50 in this situation. If you think you are going to get any of that bid you are nuts. You are not going to get a single share. You will be filled down .50.
Anyway, that is my response to shortseller. I'm sure Don Bright or others on this board that have any kind of tape reading skills will say the same thing.