Trading based purely off Nasdaq L2.

Originally posted by kowboy
Pointdirex??

I urgently need to get off of PT for several reasons and especially on to a more reasonable commission structure.

But I don't know how I could adjust to trading on Tradestation without speed keys and window linking.
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Kowboy,

I never even looked at TS. THey are a retail firm and I trade prop for PD...besides they have been ticket charge based just until a few weeks ago (as you know) and I have been with PD now for almost a year.

PD has tremendous keystroke hotkey functionality and I still use it just because I have been a hot key freak for awhile now. Having said that their mouse execution is superior to any I have ever seen. You double click on a bid/offer and it routes the order intstantly to that participant as follows:

If its a direct ECN routes to that ECN for instant fill

If its a MM then routes to SUperSOES for an instant fill ( The fact that the MM is there when you double click combined with zero second interval delay means you usually get the instant fill)

If it is a non-direct ECN then routes to that ECN via SNET ( still a pretty quick fill.

By the way there are 6 direct ECN connections (isld/arca/inca/brut/redi/attn). The point is that you don't have to try and watch different MMIDS as they bounce all around at the inside, always a second ahead of your order route decision. You simply double click and it recognizes who it is and routes accordingly...truly amazing. After all other than passthru issues who the heck cares who takes the other side right? Hope that helps.
 
glad to see your contributions.

I concur, that the top 5 volume leaders on ISLD and NASD composite are quite tight with decimalization. Many threads on this board lament decimalization, combined with all the other negative and potentially negative events that occurred near the same time. Momentum trading is vastly more difficult.

Personally, finding before a move, those <1mil share trading stocks is vastly easier, after they've made a move, and show up on the Gainers/Losers listing, than before they show up. Using stock screening software based on a pattern produces so many candidates, that its still like shooting fish in a barrel.

What I've seen others do is get a harmonic on a stock or a sector (Jay Yu of www.undergroundtraders.com), I believe, suggests that basket/sector trading is good. Perhaps that will help.

In these markets, with thinning volume, minimal public/retail confidence/participation, every trick in the book is going thin, so perhaps what we're seeing is/are market noise coupled with a draught of fundamental news. Earnings season is upon us, and coming out the backside of the recession, it appears that these thin companies (in reference to skeleton staff levels) should all be making/exceeding their lowered whisper numbers. Some other market guru was proferring that Tech is passe' and should not/would not recover its luster, and that most of those "change the way we live stocks" won't recover but do an Enron nosedive. Who's to really say?
 
I didn't know that all those mentioned were derivative software platforms off your product. So that's the momentum platform of choice...

Hmmmmm....

How are those hotkeys keyed? I'm presuming that the objective behind hotkeying is to prevent the mental doubt that occurs when one decides this is the level at which to but/sell, and then begins the self doubt process. Does one then go for an executable LMT order (such as hitting the ASK and taking the BID (son sales) ?)???
 
Originally posted by limitdown
I didn't know that all those mentioned were derivative software platforms off your product. So that's the momentum platform of choice...
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Actually, it was the Watcher that was the original platform upon which the design and features of the others mentioned were (apparently) based. I think that Watcher had been in use as early as the early mid 90's.

Originally posted by limitdown
How are those hotkeys keyed? I'm presuming that the objective behind hotkeying is to prevent the mental doubt that occurs when one decides this is the level at which to but/sell, and then begins the self doubt process. Does one then go for an executable LMT order (such as hitting the ASK and taking the BID (son sales) ?)???
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Yes this is certainly a piece of it. More specifically, the efficient order entry capability combined with the faster executions and cents/share pricing allows you to "hedge" your entries/exits.

For example if I am long 1000 shares and the upside momentum is slowing or has slowed-but an actual reversal has not taken hold yet, I will begin to post 100 share offers at the offer, then if its taken 1 and 2 cents etc above the offer, and watch the L2 and T/S (with my right eye) carefully to try and gauge extent of the waning appetite of the buyers.

Meanwhile, my left eye is watching the bid side to pay close attention to the size and life expectancy of the bids (are they getting hit/cancelled quickly) and my hands are all over the hit bid hot keys. The moment I decide that I am pressing the envelope, I start whacking a few of the bids for 100 shares each to make sure I get some of the position closed at the current inside bid while the offers are still cooking away.

If I see everything about to go bad, I can hit the biggest bid I can find with a "sell default position size" hot key and close the entire position with one keystroke at which point the open sell orders at the offer prices are automatically cancelled. Obviously, I have these types of keys set for each execution method (SS, Direct ECNS, etc)

By the way the same logic works when opening positions. With decimalization and current market conditions, rarely do I just take an offer or hit a bid with one execution for 1000 shares to open. For longs, I will place a bid or two at and/or below the bid (once I have decided to buy) while perhaps simultaneously taking an offer or two for 100 shares if the stock looks like it is running. If it runs hard right from the getgo, sure I missed some by not taking the whole position at once but that does not happen very often these days. By paring in and being patient with the bids, I can improve my average cost and give my self more room in trade, but I am always just a keystroke away from taking offers if condition warrants. The nice part is that if it does run, I am likely able to get shares at the offer/bid when there is momentum that many others (not trading on one of these platforms) would miss.

PS I was just kidding about the right eye left eye stuff....I can't really do that :)
 
I would like to know how many traders in todays environment can actually make a viable living trading solely of the L2 screen. I can see the viability of it when there were fractions but now with the decimals I doubt that one can make a long lasting living trading this nintendo video game methodology. I mean MSFT or CSCO trading solely off the L2 to me would be virtually impossible. The L2 must move like a freaking jack hammer in these stocks and unless your like 15 years old and scalping for 3 pennies all day long-- good luck making a living. Like who gives a rats ass if GSCO is on the bid or ask. Is this really trading or just a way for the house to make oodles of money off off college kids. The commissions although low on a cost per share basis along with the ECN costs must put smiles on the chop shop owners face. The vast majority like 99.95 of the people trading this manner will wake up on day and realize that after a year or two of trading this way all they have been doing is supporting the trading offices' owner and family. Wake and smell the commissions!!! Time to change.
 
Valid points for sure. If I make $500 net for a days worth of trading I probably make at least that or more for the b/d. Having said that you can make $500 net "like a 15 year old scalping 3 pennies all day." I suppose it all depends on your personality and style whether one would want to trade this way. Much of my allowance as a kid went into Asteroids and Missle Command and I suppose part of all of is still a kid inside.
 
Shortee,
Well, seems like your an expert, doesn't look like you have much to gain reading this thread...... why the f@#%k are you wasting your time.

Your absolutely right that trading off of level II is just like playing a video game. A video game for money! For some individuals quite a bit of money (relative to what they may be doing if not trading). Fact is, scalping by reading level II and making hundreds of trades a day is not a get rich quick scheme rather it is a way to make a consistent living out of the market on a daily basis. It is a way to derive a somewhat stable income by exploiting the fact that stocks do not move in straight lines, they move up and down all day everyday creating opportunity for those who care to seize it. Is it a grind? It can be! Is it the fastest way to make a million in the markets? Not likely! Is it risky? Not nearly as risky as betting on a longer term position hoping that it will go up (or down if short), enough that you feel adequately compensated for your risk while not getting stopped out by sudden spike, stuck in the ass by some Market maker trying to push the stock around, or fried by some unexpected news story that you could not possibly have foreseen.

No sir boys and girls I prefer to be moving all the time. Don't stand in one spot too long or you might get crushed. If wanting have a couple of hundred chances in a day to make money rather than 5 or maybe 6, or not wanting to expose my capital for any considerable length of time makes me a chicken shit, well I guess I better change my screen name.

As for making the house rich on commissions, well if you wanna play you gotta pay. Paying more in commissions (as a result of trading more volume more frequently) is to me just a form of insurance. I generate lots of commissions for my house and they give me the opportunity to get in and out the market as often as I feel I need to for an incrementally small cost. And like any smart business person I shop around for the best/cheapest insurance rates I can find. Translation.... I look to get the best execution ability for the cheapest commissions I can.

Everyone has to make a living and if my trading office is making money while I make money and I feel that I am getting enough return on my efforts, well I guess that's what they call the mythical 'win-win situation', or maybe that's just business!
 
Asteroids, Misslecommand......?? Whoa... showing your age there brother!

Although I have to admit, I am in the exact same boat. You forgot to mention the classics like Space Invaders, Centipede, and...... oh I'm having a brain fart I can't remeber the other one, used to be my favorite. You flew around a ship as the screen scrolled by blowing up alien ships, you had smart bombs.....uughh what was that called!
 
I totally agree with MACD addy, and thank him for clarifying. Bottom line, I trade with scalpers and sure, just like anyone else they're waiting for the big moves, but I've seen them consistently produce on just the nickel and dime winners day in, day out......
Shucks, I'll take those ten cent winners all day, at least until volume comes back....
 
So like when the kids who are trading this style in the office and they are in a position do they scream out things like Goldman is on the bid or Merrill is on the offer. Is there a lot of screaming out stuff like that. I saw that on TV a few years ago and I wonder if that type of yelling out still occurs. Hey if you feel you can make a great living with trading solely off the L2 for the next decade or two well good for you.
 
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