As a somewhat new trader today-2/23- made clear to me just how powerful an axe can be. At several entry-long and short points- I witnessed the axe completely kill momentum and in most cases reverse it, however the reversal was not strong enough for me to play. All in highly liquid stocks-8mil-30mil in volume. It was disheartening, to say the least, to see opportunity murdered by these guys. I'm hoping I can get some comments from other traders on dealing with this and or strategies--much thanks
Praetorian2 my question was not how to beat the axe. My question is what to do when a trader whose style is scalping notices extreme axe activity 1.--on one side 2.--back and forth 3.--appears to be on one side and quite possibly using ecns on the other?--Just avoid the stock for the day??Thank you
If you can't figure the axe out, just avoid the stock. No reason to take the extra risk when there are other candidates.
BAsically... on something like jdsu, if the market gets jiggy, the axe will retreat. There is just too much volume for any one mm to hold it down. But on something that trades less, that same axe may be there for a week or more trying to complete his order. In that case, you might just want to take a position in his direction and exit when you don't see that axe any more. Otherwise, just anticipate. I know it's hard, but you just have to anticipate where he will show up. I don't scalp, but I know how to trade around an axe. Im sure that there is someone more capable of answering this q. But you're probably best off just avoiding the stock then. Or only entering when you see him disappear finally.
Thank you both. Praetorian2---I understand,however, you do make mention that you do know how to trade around an axe. Is that something you might be able to share here? I'd certainly like to know-much thanks
In trading around an axe, what I basically do is just exit as soon as he shows up... In this market i find that i've been taking lots of quarters and halves instead of 1-3 pts like I used to. The bounces just aren't as big, and as a result, the axe is more prevalent.