TAPE READING (chat room cont.)

[Steve Tvardek]

Shortseller, I'm sorry but I have to agree with Maverick 100%. You dont want to be buying in front of stale bids or selling in front of stale offers. For all you know that stale buyer is just someone who is short 20k shares and wants to cover his position at a level where he thinks he will find sellers. If thats the case, why would you want to be long. The bid is not a real buyer but a short coverer and at this level he will find sellers (another reason not to be long). You have to think about all the possible situations.
Bottom line, if the bid isnt stepping up or the offer stepping down, you dont want to front run them. They are there to be taken.

Quote from shortseller:

We can sit here saying "your wrong", "no, your wrong" if you want to but I don't believe that adds anything to the discussion

If the market (futures) is going down .. and people get short.. only to "not" have the stock move at all (being absorbed by a HUGE BUYER) .... guess what happens when the market turns.. those people are squeezed north and FEAR causes panic buying to the upside. exactly what happened here. over lay the spoos with ge ... you again are talking with out even looking at the data.. your wrong in assuming the spoos rallied ..

 

[Bitstream]

Quote from Maverick74:

You are wrong. If that size is not stepping up, it's not an aggressive buyer end of story. The reason he is sitting there absorbing all the size is because it's a stale buyer. The reason the mkt shot up after that is not because of him, he was not stepping up, he couldn't have pushed the market higher, it went higher because the spoos rallied. The only reason to ever step in front of a bid is if that bid is stepping up. If that bid is NOT showing size, and the stock is strong. Otherwise there is no reason to step in front of a stale bid.

So, if I understood correctly am I right to say I should see size on the bid starting small and slowly increasing in a strong day to indicate there's real accumulation taking place? And the case of jumping on the bid when size is there won't work if it is not part of the accumulation and not just a one off.

And how is the likelihood that part of those orders someone is interested in accumulating would show up on the bid?
wouldn't they be easy to spot and therefore avoided by those willing to step-up with size slowly? Wouldn't it be possible for them to go back and forth on bid and ask?
And if so what other strategies might be used by big buyers to build up position.

Forgive my blissful ignorance here but need to ask; I'm trying to learn.

PP

 

[FuturesTrader71]

Quote from Don Bright:

[...]

Tape reading is "all encompassing" - not just looking at a simple level 1 quote.

Don

Good answer. This is why I added another option "E:" above. I train my traders to look at many factors leading up to the "size" bid. The same things apply in equities or futures.

 

[ChaosNSX]

I've read this entire thread and I think each brings up interesting and valid points. I also liked Don's conclusion of you shouldn't even be in the stock to begin with.

All I am going to say is Maverick has a good idea of how institutions fill orders with set tops. The stale or inactive quotes described , could be people covering their positions, but most likely the scenario is an institutional order has reached its top.

Whereas:

Shortseller also has some valid points about frontrunning size to provide liquidity for the buyer if an active seller is not present. This strategy works best on very illiquid stocks, with low volatility because the institution needs an active participant to make that market.

So based on this.. GE is to liquid, news, and futures driven to think that frontrunning only a 20K limit order, will be profitable enough times to justify attempting it.

I would say if you HAD to take a trade from only the information provided. Which I wouldn't advise. lean on the bid with an offer, and have a defined stop.

 

[ilganzo]

I agree with everything that has been said by Maverick, Steve and Don, just wanted to add that a large offer for a non short-exempt stock it's a different (and more obvious) game. That's because of two factors working together: uptick rule + psychology related to a falling stock.

When a large sellers needs to dump some size he won't be able to just match what's available on the bid. He/She has to wait for upticks to sell the stock. That means that the offer will sit there waiting to be filled but if for any reason it can't be done at that price level, it will start stepping down. That in turn will attract other traders in shorting the stock (or even better, other sellers with real size). The seller will get even more nervous and will step down some more until the job is done in a sort of mini-panic move. Problem is, if you missed the train at the beginning of the move, you'll have a hard time to get some stock.

Bottom line, risk/reward is way higher for a large offer than for a large buy order because of the uptick rule. "Regulations create inefficiencies that can be exploited". I read that somewhere on this site. This is a good example.

 

[nitro]

Quote from Don Bright:

Since this is just 1 part of many overall tape reading data, you cannot make a decision, not nearly enough data. For example, what is the depth of the NYOB? What is the PREM or DISC to FV?

And, if you were a Bright Trader, I would say you do nothing, because we would never trade a $100 stock...just plain bad, too much slippage.

Tape reading is "all encompassing" - not just looking at a simple level 1 quote.

Don

Any more questions?

nitro

 

[Steve Tvardek]

Maverick,
You mentioned that you no longer trade listed stocks. What do you trade now and why did you stop trading listed?

 

[Maverick74]

Quote from Steve Tvardek:

Maverick,
You mentioned that you no longer trade listed stocks. What do you trade now and why did you stop trading listed?

Steve,

I got burned out. I traded 15 to 20 stocks a day. I stared at the screen from open to close, never leaving my desk, not even for lunch. I ran to the bathroom and back in 2 minutes. I never wanted to miss a print. I stared at every print in everyone of my stocks for 6 1/2 hours a day plus the sp 500 futures. That my friend led to burnout. I just couldn't see myself doing that for the rest of my life without going blind or insane. No amount of money was worth it. Also, I anticipated the NYSE going 100% electronic. When that was to happen, the days of tape reading would be over. Of course that took longer then I thought it would, but regardless I had enough. I made some good money. Had a lot of fun in NY and really just wanted to get out of New York city. So it was a combination of a lot of things.

I also wanted to get back into options. It suited my personality more. So now I trade equity and index options in a haircut account in a JBO. Much more relaxing. LOL. And much more money. This business is a lot more scalable. And I don't have to go blind from staring at the screens all day. I enjoy my job more, have more upside, and it allows me to enjoy life more.

I think one of the things you always want to be thinking about as a trader is the big picture. What are you really trying to do. As a daytrader, you only have so much upside and so many choices. If you are using it as a stepping stone, then fine. If not, make sure you know where you want to be in 5, 10 and 20 years. The problem is everyone just assumes they will make millions daytrading and then they will move on to the next level. But what if you don't? Learning how to trade an options book is a great skill set. There are so many choices you have, so many directions to take your career in. As a daytrader, you are pretty much confined to just that, daytrading. So just something to think about. Always look at the big picture and what skills are you really developing.

 

[Maverick74]

Quote from Don Bright:

Since this is just 1 part of many overall tape reading data, you cannot make a decision, not nearly enough data. For example, what is the depth of the NYOB? What is the PREM or DISC to FV?

And, if you were a Bright Trader, I would say you do nothing, because we would never trade a $100 stock...just plain bad, too much slippage.

Tape reading is "all encompassing" - not just looking at a simple level 1 quote.

Don

Don, this post has about as much worthwhile information as a brochure for a get rich quick real estate seminar. I asked you a direct question in PM and I guess you chose not answer it for unknown reasons. This guy says he works for you and you trained him to step in front of size bids and offers. Now if this is true, I am in my right mind to call the better business bureau of Nevada and have all your licenses revoked as this is pure fraud.

Please tell me this is not what you are teaching to your students in your boot camp. Either this guy shortseller is misleading the training he received with you, or you guys need to seriously re-think your training program.

And btw, at our firm, if we caught any one of our traders using that POS NY open book, we let them go on principle. I can't believe you guys believe that adds value to your trading.

 

[nitro]

This guy doesn't trade 10000 shares a month let alone 1/2M a month.

Here is part of the chat log where he claims he trades 1/2M a month and calls Maverick stupid:

=======
...

nitro (Sep 30, 2005 10:13:31 AM)
short GE .66

shortseller (Sep 30, 2005 10:13:48 AM)


shortseller (Sep 30, 2005 10:14:26 AM)
too bad that size is on the bid

Maverick74 (Sep 30, 2005 10:16:17 AM)
shortseller

shortseller (Sep 30, 2005 10:16:21 AM)
yes

nitro (Sep 30, 2005 10:16:23 AM)
crust - ENER!

Maverick74 (Sep 30, 2005 10:16:25 AM)
you sell into size bids

nitro (Sep 30, 2005 10:16:25 AM)
Ugh

nitro (Sep 30, 2005 10:16:29 AM)
+$2

nitro (Sep 30, 2005 10:16:31 AM)


shortseller (Sep 30, 2005 10:16:34 AM)
i dont

shortseller (Sep 30, 2005 10:16:39 AM)
nitro did

Maverick74 (Sep 30, 2005 10:16:42 AM)
you don't know how to read the tape

shortseller (Sep 30, 2005 10:16:49 AM)
your putting words in my mouth

Maverick74 (Sep 30, 2005 10:16:49 AM)
size is there to be taken

shortseller (Sep 30, 2005 10:16:51 AM)
you missed it

shortseller (Sep 30, 2005 10:16:58 AM)
scroll up and re read

Maverick74 (Sep 30, 2005 10:17:18 AM)
if there were size on the offer, the stock would be going higher

shortseller (Sep 30, 2005 10:17:27 AM)
your speaking the obvious

shortseller (Sep 30, 2005 10:17:33 AM)
it was nitro that said he was going short

shortseller (Sep 30, 2005 10:17:38 AM)
i said too bad ther4e was a large bid

shortseller (Sep 30, 2005 10:17:43 AM)
it was a bad thing

Maverick74 (Sep 30, 2005 10:17:45 AM)
i know what you said

shortseller (Sep 30, 2005 10:17:45 AM)
not a good one

Maverick74 (Sep 30, 2005 10:17:57 AM)
your comment was meaningless

Maverick74 (Sep 30, 2005 10:18:07 AM)
bids are there to be hit

shortseller (Sep 30, 2005 10:18:08 AM)
i would not want to take a positon into 18k the other way

shortseller (Sep 30, 2005 10:18:13 AM)
mav your missing the boat

Maverick74 (Sep 30, 2005 10:18:17 AM)
how so?

shortseller (Sep 30, 2005 10:18:28 AM)
would you buy a stock if there was 58k to sell

Maverick74 (Sep 30, 2005 10:18:33 AM)
yes

Maverick74 (Sep 30, 2005 10:18:36 AM)
yes!!!!!!!!!!!!!!!!!!!!!!

Maverick74 (Sep 30, 2005 10:18:38 AM)
big time

shortseller (Sep 30, 2005 10:18:40 AM)
dont talk to me

Maverick74 (Sep 30, 2005 10:18:55 AM)
if someone is showing that size, its there to be lifted

nitro (Sep 30, 2005 10:18:57 AM)
this is going to be a hot topic on CNBC

Maverick74 (Sep 30, 2005 10:18:58 AM)
think about it

nitro (Sep 30, 2005 10:18:59 AM)
listen

Maverick74 (Sep 30, 2005 10:19:08 AM)
nobody shows their real hand


shortseller (Sep 30, 2005 10:19:17 AM)
thats very stupid


Maverick74 (Sep 30, 2005 10:19:21 AM)
you think a real seller is going to show the whole world his hand?

shortseller (Sep 30, 2005 10:19:26 AM)
in GE is a large instutional traded stockl

shortseller (Sep 30, 2005 10:19:31 AM)
maybe in your nasq crap

Maverick74 (Sep 30, 2005 10:19:42 AM)
i traded listed stocks


shortseller (Sep 30, 2005 10:19:47 AM)
you have no idea what your talking about


Maverick74 (Sep 30, 2005 10:19:48 AM)
i read the tape very well

Maverick74 (Sep 30, 2005 10:19:51 AM)
yes i do

Maverick74 (Sep 30, 2005 10:20:03 AM)
i use to trade 250k sahres a day

shortseller (Sep 30, 2005 10:20:13 AM)
i would rather be on the size of stock then fight it

Maverick74 (Sep 30, 2005 10:20:17 AM)
a real seller is not going to show the world his offers

shortseller (Sep 30, 2005 10:20:22 AM)
i am not gonna be a bug on the windsheeld

nitro (Sep 30, 2005 10:20:29 AM)
WOW!!!

Maverick74 (Sep 30, 2005 10:20:31 AM)
you have no idea how to read the tape

nitro (Sep 30, 2005 10:20:33 AM)
AMGN!!!!!

nitro (Sep 30, 2005 10:20:36 AM)
Ugh

nitro (Sep 30, 2005 10:20:37 AM)



shortseller (Sep 30, 2005 10:20:49 AM)
mav i have traded 1/2 shares a month for over 3 years


Maverick74 (Sep 30, 2005 10:20:59 AM)
buyers and sellers of listed stock never show the world their intention

shortseller (Sep 30, 2005 10:21:00 AM)
i know ge well

Maverick74 (Sep 30, 2005 10:21:01 AM)
think about it man

Maverick74 (Sep 30, 2005 10:21:13 AM)
if you have 10 million shares to sell in GE what are you going to do

Maverick74 (Sep 30, 2005 10:21:22 AM)
show everyone that you need to dump millions of shares?

Maverick74 (Sep 30, 2005 10:21:25 AM)
are you kidding me?

shortseller (Sep 30, 2005 10:21:25 AM)
sell one sent below him

Maverick74 (Sep 30, 2005 10:21:27 AM)
lol

shortseller (Sep 30, 2005 10:21:29 AM)
cent*

Maverick74 (Sep 30, 2005 10:21:37 AM)
oh jesus

Maverick74 (Sep 30, 2005 10:21:41 AM)
good luck with your trading

nitro (Sep 30, 2005 10:25:01 AM)
short WMT .39

nitro (Sep 30, 2005 10:26:58 AM)
so far it is a bad idea to short anything that is not in freefall

nitro (Sep 30, 2005 10:27:08 AM)
but I am holdking my shorts

shortseller (Sep 30, 2005 10:27:19 AM)
short ge at .70

shortseller (Sep 30, 2005 10:27:41 AM)
note the size selling walking the price down

shortseller (Sep 30, 2005 10:27:46 AM)
30k

Maverick74 (Sep 30, 2005 10:28:06 AM)
oy vey

nitro (Sep 30, 2005 10:28:11 AM)
LOL

nitro (Sep 30, 2005 10:28:12 AM)


shortseller (Sep 30, 2005 10:28:23 AM)
i guess thats what makes a market ..

shortseller (Sep 30, 2005 10:28:26 AM)
sorry if i dont agree

Maverick74 (Sep 30, 2005 10:28:43 AM)
its not about agreeing

Maverick74 (Sep 30, 2005 10:28:48 AM)
its about knowing how to read the tape

nitro (Sep 30, 2005 10:28:49 AM)
you don't know how to trade shortseller

nitro (Sep 30, 2005 10:29:00 AM)
the analsis you are making is just wrong in this case

Dantheman (Sep 30, 2005 10:29:01 AM)
long ym 10575

shortseller (Sep 30, 2005 10:29:02 AM)
sure are alot of opinnions on here

shortseller (Sep 30, 2005 10:29:07 AM)
like any one of you know me

nitro (Sep 30, 2005 10:29:12 AM)
when a seller steps down, there are no upticks

shortseller (Sep 30, 2005 10:29:16 AM)
that mind set is just sad

nitro (Sep 30, 2005 10:29:28 AM)
learn to trade

nitro (Sep 30, 2005 10:30:07 AM)
only an idiot short seller lets a stock uptick so that others can get ahead of him and sell

nitro (Sep 30, 2005 10:30:13 AM)
think about it

nitro (Sep 30, 2005 10:30:19 AM)
go and study and come back

Maverick74 (Sep 30, 2005 10:30:25 AM)
LOL

nitro (Sep 30, 2005 10:30:27 AM)


nitro (Sep 30, 2005 10:30:32 AM)
tooo funny

nitro (Sep 30, 2005 10:30:36 AM)
Rick

nitro (Sep 30, 2005 10:30:39 AM)
shhhhhhhhhhhhhhh

shortseller (Sep 30, 2005 10:30:39 AM)
just shot please

shortseller (Sep 30, 2005 10:30:43 AM)
stop*

Maverick74 (Sep 30, 2005 10:30:48 AM)
LOL

shortseller (Sep 30, 2005 10:30:49 AM)
please stop

Maverick74 (Sep 30, 2005 10:31:09 AM)
shit if you can't take the heat in here, the mkt ain't going to be much nicer to you

Maverick74 (Sep 30, 2005 10:31:44 AM)
the mkt is much more unforgiving then this room

nitro (Sep 30, 2005 10:31:45 AM)
ENER +$2.75

nitro (Sep 30, 2005 10:31:48 AM)
UUUUUUUUUUUUUUUUUUUUUUUGH

nitro (Sep 30, 2005 10:31:50 AM)


nitro (Sep 30, 2005 10:32:10 AM)
I can't stand to watch a stock I wanted $2 ago go higher

nitro (Sep 30, 2005 10:32:16 AM)



guavaman (Sep 30, 2005 10:32:58 AM)
Let's all just stop. Maybe a song will help us all come together. Just like the old coke commercials.


guavaman (Sep 30, 2005 10:33:04 AM)
whatta ya think?

guavaman (Sep 30, 2005 10:33:15 AM)
I'll get us started.

Dantheman (Sep 30, 2005 10:33:18 AM)
rots ya insides

Maverick74 (Sep 30, 2005 10:33:42 AM)
guavaman


nitro (Sep 30, 2005 10:33:44 AM)
Frere a jaques Frere a Jaques - dormes vous? dormes vous....


Maverick74 (Sep 30, 2005 10:33:45 AM)
this is a trading room

Maverick74 (Sep 30, 2005 10:34:00 AM)
if we can't talk about trading then there is no reason for this room to exisit

nitro (Sep 30, 2005 10:34:12 AM)
oh man

nitro (Sep 30, 2005 10:34:24 AM)
I am going to hurt myself laughing so hard

guavaman (Sep 30, 2005 10:34:32 AM)
Mav, I would like it if thats all was discussed in here.

Maverick74 (Sep 30, 2005 10:34:53 AM)
well today is pretty good so far

nitro (Sep 30, 2005 10:34:53 AM)
guavaman - when someone says something plain wrong

nitro (Sep 30, 2005 10:34:58 AM)
WE JUMP ALL OVER HIM

nitro (Sep 30, 2005 10:35:00 AM)
LOL

Dantheman (Sep 30, 2005 10:35:05 AM)
apparently

nitro (Sep 30, 2005 10:35:08 AM)
jia

guavaman (Sep 30, 2005 10:35:09 AM)
what did short say Nitro?

nitro (Sep 30, 2005 10:35:15 AM)
read the log

shortseller (Sep 30, 2005 10:35:34 AM)
the sad thing is .. i didnt see the market go any lower then his short .. and some how i was wrong

shortseller (Sep 30, 2005 10:35:47 AM)
it turned hard right there

shortseller (Sep 30, 2005 10:35:51 AM)


nitro (Sep 30, 2005 10:36:01 AM)
my trade may be wrong, but you don't know a thing about trading

guavaman (Sep 30, 2005 10:36:12 AM)
you ought to be ashamed of your perspective Short. =)

shortseller (Sep 30, 2005 10:36:16 AM)
sure .. but my winning trades speak louder then your loser

shortseller (Sep 30, 2005 10:36:36 AM)
call me what you want.. i would be considered wrong and winning then right and paying out

...


nitro (Sep 30, 2005 10:36:43 AM)
what firm do you work for?

...


shortseller (Sep 30, 2005 10:36:58 AM)
bright

Maverick74 (Sep 30, 2005 10:37:02 AM)
LOL

nitro (Sep 30, 2005 10:37:03 AM)
which office?

shortseller (Sep 30, 2005 10:37:13 AM)
i am remote but i was in the las vegas office for 2 years

shortseller (Sep 30, 2005 10:37:21 AM)
the managers name is jeff

shortseller (Sep 30, 2005 10:37:30 AM)
don and bob both know me personally

====



nitro