Out of curiousity Don, do you teach your traders to anticipate when the shorty is going to get lifted and uptick the stock, or do you teach them to stop with the size, and wait for the uptick to take them out. The reason I ask, is recently it's been harder to stop on shorties cause people continuously uptick the stocks. By the size alone it seems it's day traders who are doing it. I know, I teach that 95% of the time your better off stopping rather then anticipating the uptick and initiating it yourself. This way you can maximize your gain. Sometimes you get screwed this way, but it washes out and then some if you just follow a stop strategy, or at a minimum sit on the NX key and wait for the first uptick. What's your opinion?
This is, of course, very subjective. I usually whack the bids down a dime or so, and when I see 1 print on the offer, I cover half, and then place a lower bid with an envelope order to cover the balance (hoping for the "trade through"). Don
Very nice, the way it should be done. But unfortunately it seems many are now just anticiapting the uptick, and taking it upon themselves to be the first uptick, very annoying, especially when the stock keeps movind down. Then you have to get back in at a lower price, and miss a good portion of the move. And I agree, there are situation where you should initiate the uptick, but it's rare. Glad to see you're teaching the right way to exit trades.
Don, what you're describing is equivalent to what fighter pilots are trained to do, regarding "trusting their instruments" instead of their visual observations. Interesting that you said, "no time to review or pop up a chart or anything". Something that is also "unsaid" is that in order for this method of analysis and trading to work, one has to concentrate solely on one stock, and perhaps be ready to commit to very large size, hence making his money mining just one stock. I would further suggest that these stocks would be very large volume traders (on a consistenetly daily basis), in order to make this type of trading worth the while. Am I close on these presumptions? Also, does this method of "tape reading" work with NASD / Level II scenarios?
why is this hypothetical short seller not using a bullet ? I am not so sure it's a short seller when I see this pattern. It can be. But I'd rather assume the market is going lower if no one hits him or the spread widens, weak bid etc.. Focusing on what is happening rather than why.. There are so many reasons and possible manipulations or mistakes. It does not matter after all. You can make money from it if you can hit the bid. it can save you money too, when you see this and you were trying to go long (or are long). I agree tape reading is very important. imo with naz you can read the tape too, but it is so much more chaotic than nyse. it probably does not mean you can't make money reading that tape. I don't really try because I'd rather do what is much easier to me : trade nyse with the specialist. tntneo
You're making some good assumptions. We like people to come to "our poker game" not try to play in someone elses. Our best traders focus on the same stocks day in and day out. Filtering profitably comes and goes, based on market conditions, but becoming a "surrogate specialist" in your own stocks seems to always work over time. No, this does not work on Level II NASD since there is no single marketplace for the orders to reside or be "worked" by a broker. Reading Level II is pretty much impossible (for any real benefit) since those who are experts at it, use Level II to "bluff" more often than show real orders. The old "cancel if close" scenerios." I like our new people to find 1 or 2 stocks, and trade them all day long. Our "filterers" are not doing as well, as I said, prospecting is a tough geme. Don
You're right, except that most institutions cannot use bullets or conversions, and that still gives us a bit of an extra edge. Trading with the Specialist is what it's all about.....I like to "help out" and slam those bids and then take out the short seller when the price is down. And, of course, this is just one small part of overall tape reading. Don