The stock gapped down at 14:29 and bottomed out at 14:33 then I went long at 14:39 after it stabled out. Squeezing the shorts out by running the stock DOWN was a typo.... Once the stock gapped down that much and MMs went short, there was then a high probability they would gap it up and squeeze the shorts out which is why I went long. Sorry for the confusion... sometimes I'm typing and thinking too fast while watching my charts and L2.
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Trading Journal - May
- Thread starter Seanote
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The stock gapped down at 14:29 and bottomed out at 14:33 then I went long at 14:39 after it stabled out. Squeezing the shorts out by running the stock DOWN was a typo.... Once the stock gapped down that much and MMs went short, there was then a high probability they would gap it up and squeeze the shorts out which is why I went long. Sorry for the confusion... sometimes I'm typing and thinking too fast while watching my charts and L2.
Originally posted by Tony01
Seanote,
Ya gotta feel good about getting out of PALM when you did now!!!
http://biz.yahoo.com/prnews/020530/sfth064_1.html
Tony
Sure do!! When ever a stock consistently sells off to create a steady downtrend weeks before earnings is a big sign that earings and forecasts are not going to be positive. Insiders and the select few gain wind of this info weeks before the announcement and begin slowly chipping away and closing out creating the downtrend. Unfortunately PALM shorts weren't available or it would have been a good short. Keep that daily chart in mind to recognize other stock's trends as earnings approach.
Originally posted by Guerilla
Seanote, great trading. I started a thread yesterday about leaving my job for trading full time. You had a questioni about my time zone - it's the East Coast.
For the last few years, at work, I've had the opportunity to watch the markets in real time and occasionally trade (not direct). The style I've focused on most is very similar to your own and I often get a very good feel before things happen.
I'd be interested to hear your comments about the questions I posed yesterday.
Reason I asked about time zone was to see if you were west coast or not so you could place your swing trades before work. I wouldn't leave a 6 figure job either, unless you aren't happy there anymore to take on trading as a full-time job at the beginning. Your learning curve will obviously be less than a newbie due to your experience and the environment you're in. Since you are east coast you almost have to make a decision unless you play options or continue to swing trade. I worked for a direct access firm a couple of years ago while I traded but only had time to swing trade and play options. I would do all my TA and research at night and verify market conditions before open. In order to even tade in that capacity you still need some time to "watch" the market so you know when to place the trade. I don't know if that answered any of your original questions, but if there is anyway you can work out swing trading and keep your job, I would strongly urge you to give that a try first before you resign.
Originally posted by Seanote
... When you see a stock gap like this one did, especially .50 so quickly, THIS IS THE EDGE you need over the market and must take advantage of these situations. Another one (for scalpers), when you see all ECNs line up on the bid with all MMs on the ask, GO LONG because the is only Buying pressure and the MMs usually will disappear at the same time and the stock will gap up quickly. Same goes for the short side, ECNs lined up on ask and MMs on bid. * This rule generally applies to heavily traded stocks.
Seanote,
Another masterful performance. I am intrigued by the above statements however, as they represent the opposite of my general approach. At the least, I would say playing for a reversal after a sharp move or gap is a bit tricky. Many times they pause, then blast off in the direction of the gap.
Also, I have always looked at ECN's, except INCA, as dumb money to fade. Would you really go long with ECN's only on the bid and say, GS and MLCO on the ask? Who knows how many the MM's will sell?
Originally posted by Seanote
Once the stock gapped down that much and MMs went short, there was then a high probability they would gap it up and squeeze the shorts out which is why I went long.
Seanote,
I am finding your trades very educational. I frequently pull up your plays to see if I can determine your rational. Keep em coming!
If I understand you correctly, in the above QLGC trade, the MMs started a selloff which gained momentium because others saw this and jumped on board. I assume once the MMs started the ball rolling that they backed off. Their real intention was to buy the stock at a cheaper price from the other momentium sellers, force the price back up and sell it at a higher price. Is this a correct accessment?
Thanks,
Mike
Originally posted by BullFighter
Seanote,
I am finding your trades very educational. I frequently pull up your plays to see if I can determine your rational. Keep em coming!
If I understand you correctly, in the above QLGC trade, the MMs started a selloff which gained momentium because others saw this and jumped on board. I assume once the MMs started the ball rolling that they backed off. Their real intention was to buy the stock at a cheaper price from the other momentium sellers, force the price back up and sell it at a higher price. Is this a correct accessment?
Thanks,
Mike
Exactly. The majority of MMs (the smaller capitalized ones vs. Merrill, Goldman, Lehman, Morgan, ect.) play the same game but have less probability/control over the reversal and when it happens. They are basically in the same boat as the we are in regards to playing the gap. The bigger MMs will usually try to soak the bid or ask, depending on there position, and hold the stock up or down. About half the time they will succeed and fuel the reversal. The other half they're wrong and loose quite a bit. Also, a lot of MMs will post their orders on INCA, BRUT, REDI and ISLD with maybe 1,000 shares posting but have a huge reserve size behind that lot. You truly don't know how many total shares they want to trade. Sometimes they will let the share size decrement down from 1,000 to 100 then auto refresh back to 1,000 until there full order is filled and other times they will hold they're size at 1,000 and keep executing without decremeting.
Originally posted by AAAintheBeltway
Seanote,
Another masterful performance. I am intrigued by the above statements however, as they represent the opposite of my general approach. At the least, I would say playing for a reversal after a sharp move or gap is a bit tricky. Many times they pause, then blast off in the direction of the gap.
Also, I have always looked at ECN's, except INCA, as dumb money to fade. Would you really go long with ECN's only on the bid and say, GS and MLCO on the ask? Who knows how many the MM's will sell?
If GS and MLCO are on the ask soaking it up I would wait to go long to see if Goldman and Merrill held the ask or bailed. Half the time as I mentioned in my recent post to Bullfighter they will soak and leave which then creates the gap quickly. If they hold the ask and the stock stabilizes then I will re-evaluate the play. You would think in this low volume environment the big MMs could hold and control the prices more often. Maybe it's just the particular stocks I've been trading lately but these MMs are not soaking and holding these levels near as long as they used to. Again, I believe this market has created a much more level playing field in regards to retail vs. MMs and I'm taking full advantage of it.
Originally posted by Seanote
Maybe it's just the particular stocks I've been trading lately but these MMs are not soaking and holding these levels near as long as they used to. Again, I believe this market has created a much more level playing field in regards to retail vs. MMs and I'm taking full advantage of it.
I make most of my trades on kalc and qlgc and I'd agree that MMs don't eat as much shares as they used to, escpecially players like GSCO and MSCO. I do see institutions using BTRD soaking up thousands and thousands though, and, in my estimate, not often successfully.
(There was a memorable case of GS on klac last week one afternoon, holding up the bid at 58.70, not decrementing just 1000 after 1000, versus 10 participants at the ask...haven't seen something like that for a long time. - went to 58.15 soon after ...which point GS done the same thing at the ask...great performance)
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