Hi All, Jeff Cooper describes a few trading strategies that he calls Stepping in Front of Size. In brief, whenever you see two large bids sizes ( >= 5000 shares) at higher bid prices in succession, you'd buy at the market knowing that the big buyer is there behind you to sell to. At the same time, you're hoping that the big buyer will become more aggressive and push up the price. He'd limit this sort of trading to NYSE and AMEX stock that trade less than 200K shares a day on average. For those of you who trade this sort of method, has it been successful for you? I've had mixed results with it myself. Thanks. -- Punter
StockPunter run a search on this board for Great New Pattern and Great New Pattern2. Pretorian2, Dustin, me and a few others play with that setup a lot. We are usually trading with the specialist. rtharp
I have had success with this type of trading. Often, on NYSE issues - trading under 500K a day - I'll see a buyer/seller post 20,000 to 60,000 shares on the bid/ask. If he is on the inside and pushing, I'll get in front or just put in a market order in his direction and ride with him. This worked great last Tuesday on CCK. I was long and moving up in the 4.90's when a seller stepped to the inside ask with 50K. Once he stayed on the ask down about .10 over the course of 15 minutes and refreshed even when some buyers took big chunks out, I flipped and got short and rode it down to 4 in a few hours. He was still there on Friday, showing 50K on the ask at 3.90 but started to fade a bit today. I have a trailing stop but already a nice profit. I think this is much easier on NYSE issues because there are fewer games being played. I rarely see that size on NASDAQ stocks because of the reserve. I've seen INCA sell 1 million shares over 3 weeks and never show more than 1000 on Level II.
Definately true. Anytime I see something of 10k or more, I just do a 5k market order. Even if it sweeps the stock up 1.5 pts, I know that I can offer em all out and get taken for a quick half point. It's a freebie. Look at nc when it made that vertical move up earlier this year. I scalped halves over and over on 2-5k shares. It was free money.
Chris Farrell (a keen proponent of daytrading on the NYSE rather than on Nasdaq) has a similar strategy in his book "The Day Trader's Survival Guide". It is called the Lift and Place strategy, and is a fundamentally similar in style Level2 strategy to Cooper's Stepping Out in Front of Size strategy, except that the strategy requires significant liquidity in the stock candidates. However, in a post-decimalised world, the strategy has become increasingly more difficult if the objective is a quick scalp. Mr Farrell recognises this on his website: ****************************** "Which stocks do your recommend for the NYSE Lift and Place trade? This is one strategy that has become more difficult due to decimalization. Below is a list of stocks to watch. XRX, CD, RAD, WDC, SGI, CNC, CMX, TOM, KM, HRC In addition, it should be noted that more volatile issues like GS, TXN and EMC have also become great stocks to "scalp trade" because of the move to decimalization. In these kinds of issues, instead of looking for smaller profits of 6 or 12 cents, we are looking for slightly larger moves of 25 cents or 35 cents per trade." ****************************** Strategy Details. Goal: To extract a 1/16 pt profit on a temporary demand/supply imbalance Types of stock: NYSE stocks below $10 when volume is high and buying interest is strong Kinds of stock: Widely held e.g. WDC, RAD, HRC, KM, ODP Warning: Avoid any stock if it is trading below 1million shs or is down on the day Trade size: Between 2000 and 5000 Order Type: Limit Strategy for the buy: Wait for institutional buyers to take large chunks out of the ask size and then "lift" the last remaining stock at that price level Strategy for the sell: Immediately place the stock up for sale 1/16 pt higher
FWIW, CCK looks to be shaping up for a reversal. There is a bid at 3.55 for 40K and now 10K at 3.60. I just got filled in front of him...with a very tight stop at 3.49. Any thoughts?
Candle, could you post a link to Chris Farrell's web site. I have done a google search for it but the Farrells it comes up with are not the one I am looking for.