I have recently joined this particular board and mostly visited the Direct Access (Retail) Forum up to this point. I have traded heavily for 6 years, work for a Direct Access firm and am in the process of accumulating additional capital to open a hedge fund that should be up and running by mid Q2. I have done very well trading and learned many do's and don'ts, gained knowledge and experience from my clients and from myself, and been exposed to a handful of the best and worst traders and Market Makers (MM). I will not mention the firm I work for either. What I like to do is periodically move from board to board and talk with fellow traders and bounce back and forth ideas, techniques, strategies, ect; Some of you believe that you hold the golden key and will not relinquish your strategies or experiences with the board and that's fine. I started watching message boards 8 years ago and didn't post a message until 4 years ago. I was a sponge a learned very quickly which handels to ignore and which ones did their due diligence (DD) and posted messages worth reading as I'm sure most of you have already found. I will be happy to talk about my background and experience as we move along. I plan on starting a new thread or two this evening focusing on trading strategies/techniques. Typically the 2 most questioned strategies are playing the gaps and technical analysis. Each message board reacts differently when these threads begin ranging from a few replies at first, to non-stop a week later. I'll be happy to answer any questions or comments you might have. I enjoy talking with traders and if I can offer any insight or suggestions that will help minimize your losses or maximize profits then I would like to continue the threads. The main reason I'm doing this is because I eat and breathe the market, enjoy talking to people who have a clue and I wish there was someone that did this when I started trading years ago.
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Trading Strategies/Mechanics
- Thread starter Seanote
- Start date
Dear fella trader,
You mentioned gaps. This is what I wrote on another thread so feel free to fire away on my gap strategy; id really like some feedback. Trash it arround if its no good so at least I save some money.
Alex
You mentioned gaps. This is what I wrote on another thread so feel free to fire away on my gap strategy; id really like some feedback. Trash it arround if its no good so at least I save some money.
Swingtrading is a perfectly good way to trade/make/lose money. BUT! It really doesnt fit my personality. Firstly you have to really spend endless hours each night scrolling through charts (I used to do some 200 daily charts sometimes more than 60min, than 30 min etc.) and I would usually come up with too many plays. Id put my plays on screen the nex day at the open and my emotions would really destroy it all as noone can watch 20 charts on the open and jump in on some plays.
The approach was wrong. All I needed was say 5 stocks to watch with precalculated entry/exit/stop levels and just mechanically enter - place stop-walk away. But no, I had to turn on the 3min chart and get all worked up over every tick
Another thing to consider is I have only about 5000$ to trade with so If I size my positions to trade smart, keep R/R at 1:3, 1.5% risk etc I would end up with only say 60 shares of a stock so my profit potential is very limited from the beginning.
After really "examining" the way I think I have found that I prefer lesser risk thus lesser profits BUT more frequent. So basically DAYTRADING is what I think I should be doing. I may be completely off boat here but im the type of person that has to trry it to know it aint good. Course im not gonna jump outta the window to see Ill get hurt LOL!
What I am thinking as the last swingtrading approach that may work for me is overnight gap plays. My basic idea is to open the charts in say the last trading hour and look for most advanced/declined issues. Also Id limit myself to under 5$ crowd so I can pick up at least hundres shares and NOT risk being wiped out completely should they bacrupt overnight. Then Id go along with the momentum and hope for a gap my way (up if Im long) next morning and sell into that gap.
Also, the other thing Im considering since I really WANT to be able to daytrade is to start daytrading ES futures. I know ill probably get murdered but.... I just may make it, eh?! I dont have to pay the rent or the bills yet so I would be happy with 3-5 tics each day. Thats all, a couple of tics.
If there is anythink you like in this post, im glad if not... well sorry I couldnt help!
Alex
I've been watching the level2 and last sale feeds on various NASDAQ stocks and am curious as to two things:
1) the quantity and price of the last sale rarely matches either the number of best bid or ask shares or their respective prices. I can't believe there are that many market orders coming in.
2) Some large trades are executed at prices above and below the market (e.g.: a few days ago Expedia had the following last sales within seconds of each other:
55.80 100
55.80 100
55.81 300
55.69 10000
55.81 100
55.82 700
55.82 200
55.84 400
How did the 10000 shares get the favorable price? Quantity discount?
1) the quantity and price of the last sale rarely matches either the number of best bid or ask shares or their respective prices. I can't believe there are that many market orders coming in.
2) Some large trades are executed at prices above and below the market (e.g.: a few days ago Expedia had the following last sales within seconds of each other:
55.80 100
55.80 100
55.81 300
55.69 10000
55.81 100
55.82 700
55.82 200
55.84 400
How did the 10000 shares get the favorable price? Quantity discount?
Most likely it's a delayed report.
Originally posted by Sunfair
How did the 10000 shares get the favorable price? Quantity discount?
Why do you assume this is a favorable price since it's below the market.
While it could be a delayed report, there are other possibilities. The one that instantly comes to mind is that someone wanted out of the stock and negotiated the trade with a MM. The MM agreed to buy the stock from the customer at a lower price. This way the MM can chip it out as the stock, hopefully, climbs. And the customer is happy because they don't have to make a bunch of small, costly trades to get out of the position.
Originally posted by Sunfair
I've been watching the level2 and last sale feeds on various NASDAQ stocks and am curious as to two things:
1) the quantity and price of the last sale rarely matches either the number of best bid or ask shares or their respective prices. I can't believe there are that many market orders coming in.
Yes you can believe that there are that many Market orders...moreover do not believe that the Level 2 quote is all encompassing of the entire volume being traded on the Naz. In fact I would venture to say that only a small fraction of the Naz volume is ever represented in the L2 quote. They (level 2 quotes) are just advertisements that-thanks to DAT-individual traders can not answer via SOES/ECN's etc. Meanwhile, millions of shares are matched via other trading systems outside of the Nasdaq Quote driven market. Many/most of these shares represent internal matches/transactions occuring within all the brokerage houses as their different customers decide to buy and sell the same stock at the same time. These (market) orders never hit Merrill's quote on the Level 2...why should they as they represent a riskless profit for Merrill via the spread as they match the buyer who pays the low offer with seller who receives the best bid. However all transactions must hit the tape so we see everything on T/S even though it never was represented in the L2.
Originally posted by Sunfair
I've been watching the level2 and last sale feeds on various NASDAQ stocks and am curious as to two things:
1) the quantity and price of the last sale rarely matches either the number of best bid or ask shares or their respective prices. I can't believe there are that many market orders coming in.
2) Some large trades are executed at prices above and below the market (e.g.: a few days ago Expedia had the following last sales within seconds of each other:
Agree with AA on that one, and when the size gets bigger eg 100k blocks, they may not even be delayed as they will usually go at a premium/discount to get the deal done quickly etc.
Originally posted by BruceF
Why do you assume this is a favorable price since it's below the market.
I always used to ask new traders if a particular print was a buy or a sell. INevitabley some would say a buy and some would say a sell usually depending on whether it was a print from the bid or offer side. The answer of course is....its both. SOmeone bought and someone sold.
He was looking at it from the perspective of the buyer...you were considering it as a seller.
The answers in regards to T&S prints not matching the National Best Bid/Offer (NBBO) are correct. MMs have 90 seconds to report executions to the tape. Many tiime soon after the market closes you will see huge blocks executing sometimes .50 - 1.00 outside of the inside market. Most of the time these are institutional trades that have placed market on close orders OR ex. a portfolio manager who transacts business on a regular basis with a MM or maybe a hedge fund manager will call each other at or after the close and say they have 100,000 CSCO they want to dump between 15.50 and 15.75...will you accept the trade? If so, you'll see soon after trades printing somtimes in one block or they might break them up into many trades.