Is this a good trading strategy?

Discussion in 'Technical Analysis' started by DarkProtoman, Apr 10, 2009.

  1. Is this a good trading strategy:

    1. If you have, say, 1000 shares of a stock, post an order such like $10-$10.25(75x10). This will trick other traders into thinking there's huge demand for the stock, and they'll want to get in ASAP, so they'll buy your thousand shares at $10.25/share.

    2. Since volatility is good for day traders, trade stocks around earnings release dates, as well as the third Friday of every month (day before option expiration; derivatives traders and market makers will be buying and selling stock like crazy to hedge their positions).

    3. Watch for bullish divergences in the minutely Chaikin oscillator, and a decrease in minutely Bollinger Band Width; enter trades then, since these two indications herald a major upside breakout.

    4. NEVER use market orders; they give the market maker carte blanche to f**k w/ you and give you horrible fills, b/c your order can get passed around, and market makers can trick you. Always use limit orders.

    5. ALWAYS set a trailing stop at 10% below the market price of your position; better yet, buy a put option

    6. Arbitrage across the ECNs after hours.
  2. Diego11


    Depends on the stock you are buying I guess
  3. Can you be more specific?
  4. What you've posted is a list of random ideas more than a "trading strategy."

    1. In order to do this I think you need to be putting in very large orders, I've heard stories of people putting in false bids of like 50,000 shares on a stock that trades maybe 300k daily to encourage other traders to jump in ahead of them and push the price up. But there's the risk that it doesn't work.

    2. Don't trade stocks so I dunno. Put up some charts and see what kind of action you get on these days versus other types of days.

    3. No idea, backtest it.

    4. Try both and see what happens.

    5. Check out the premo you'll be paying on those puts. Stop is often a better choice and 10% seems extremely high. But then it's meaningless without knowing more about what kind of TF you're talking about, which stocks, etc.

    6. This most likely isn't something you can just pick up and do. You'll probably have to automate it and colo a server in New York to shave a few milliseconds off the order delay.
  5. You should try this, you'll have 8500 shares in the stock in no time :)
  6. Investopedia says that posting phony sizes was how market makers tricked people.
  7. It was about 1000 years ago. Then someone figured out you could hit those bids, put 10k on the offer and chase the stock down (surprising the hell out of the guy with the "fake" bid who frantically pissed his pants while hitting bids.) After that someone figured out you could try to get hit for 10k, take the 10k offer that immediately showed up the clear out a point of offers and by then it was the the second guy who was pissing himself.

    There are about 50 more variations that I won't go in to. Moral of the story is don't put in orders unless you want them filled.
  8. Who is this Ivestopedia guy? How long has he been trading? Sounds like he's a bit of a know-it-all.
  9. BT247


    There's a few things I don't really agree with, but most of all the 10% stiop. Every stock's volatility is different and 10% in that context is totally arbitrary. I use a custom channel I constructed that takes into account each stocks own volatility and then put a standard deviation or two, depending on the stock. It works especially well in a trending market, any time frame.

    <a href="" title="Picture 9 by BT24_7, on Flickr"><img src="" width="500" height="313" alt="Picture 9" /></a>

    In a short, a close above the top line stops you out. When long a CLOSE below the lower line is a sell, you can see CAB is still a long. Typically when there's a stop, something has changed and the trend is done. This system takes into account recent volatility,
    #10     Apr 25, 2009