With all the changes taking place in the NYSE (SHO, Hybrid, etc.), is tapereading the specialist and scalping still a profitable strategy? I have added tapereading/scalping as one of my strategies for about 8 months now and currently feel that the introduction of hybrid has made this strategy a lot harder. In fact, it is almost impossible to have an accurate read on a stock now because of all the whipsaws. Any thoughts/opinions?
I do not just read the tape meaning look at the T&S. Also I am not a scalper for optimizing of profit flow reasons. But I do look at two things that realte to your concerns. I stay in the market most of the time (so I can't scalp because scalpers are mostly sidelined and looking for something. They enter and exit as a rule). The most detailed aspect of when I take profits (I do reversals so I reenter immediately on the other side at the time I take profits) is the timing taken from the DOM ladder. By looking at the DOM (where about four styles of trading are intermingled with their respective bluffing, ec.) you get to see the limits of the shortest duration profit taking scenarios. There is a scalping thread going on now where one person advised the dominant scalping posters of how they are out traded by this group that takes this shortest duration profit making scenarios. Consider how you could make use of the DOM and how you can watch this particular short duration strategy unfold. I used it in two separate meetings at the Vegas expo to raise Q's related to the then being prsented slower strategises. I got to meet the presenters afterwards in each case since they dropped by to join the group conversation I was in. By looking at this trading style where it can be seen you can use the turning points these people are using to make more money or you can know whether a trade you have on is gong to work and go to your target if you have guessed one of those things. Scalpers quit earlier in their trades than these guys do and they sideline for a while. Focus on the DOM. look at the "wall". This is my term for the next pivot laying out there ahead of the current price movement. What does the wall look like? It is a disruption of the depth of the market and the depth slowly increases as you go away from BBid/BAsk. Depth means the number of contracts showing as being played by the four common strategies that are being seen. I use a coded thing to translate this into stalactites that hang down drom the ladder. You see on one side a long stalacite and it is the WALL. Price can be moving away from it or to it. you can see that one side (bid side or Ask side) is shorter. That is generally the direction of the movement of price as the contracts are eaten over time. Usually the market continues to move if there is no impediment. Walls show up as impediments. They first appear 5 levels out. Also it is true they can be fake for a while BUT if they are, they do not reappear as price moves to them and they are cancelled. So who cares. Here is something to remember. When you see a Wall and it I "behind" the direction of price movement, do not forget it. It will drop off the list BUT it is still there. You can use it later as a limit of price ovement and a place to ake profits upon a reveral and as price retraces. This stuff should set you up quite well for doing the hybrid you have chosen. Where does the wall come from?? Think this through thoroughly.