What are some setups you guys are using? charts/timeframes/market conditions, etc. To get things started, here's one that's working for me fairly consistently (if you think it's garbage - which is totally fine - please give a clear and logical explanation of why): Market is going down (I have the major indices on 5 minute charts) while my stock is holding fairly steady and refuses to follow on fairly low volume. Once the market reverses the volume will usually come in heavy and it will shoot up, good for 1 - 3 ATR move, sometimes more obviously. It fails miserably if the market continues going in the same direction then support breaks and it goes with the market, at which point I sit back and start looking in other places. I watch the stock on 36t and 216t charts, recently started experimenting with MA's but still working out the kinks with that one. Hope that made sense, lets hear some more.
Buyer steps up large size, gets filled, refreshes on ECNs a few cents down, people short into it, decent sized offer comes in, people realize the refershing ECN is the buyer, buyer brings back large size, I buy the offer everyone who's short has to play off, squeeze people and take away the liquidity for the buyer who has to step it up more aggressively and go once the bid he steps up starts to get taken out.
I was thinking more like in terms of charts and market conditions but you're bringing a different perspective into this, which is always cool. Umm... got anything else you would be willing to share? - my personal LII expertise is not nearly up to par to do what you're describing.
Kirkrrr it sounds like you do a form of what i do which is skip around until I land on the relative styrength. In this case SIGM / VRTX / EMC ~ SI
One setup I like a lot is the ascending/descending triangle with size. Say there is a 20k offer sitting at 79.00, stock makes a shy attempt and touches it, goes down 10c, does another attempt but goes down say 5c, then things get tight around the size and the buyer who's been buying from all the stupid short sellers lifts the offer squeezing the shorts and bang you caught 40c on 1000 shares...
That's a very very simple example of a trade off the LII. It's a very simple setup. If I videotaped it, and you had the discipline to trade it properly, and knew all the subtleties and all the ways they can con you for your money and game away your liquidity, you could make a living off of that ones etup. You would need practice but you could probably try doing it on a demo account, and then if consistent go to 100 shares. But, if you take the time to watch the LII and the prints all day, you will see many more simple setups for yourself. If you don't put the time in, however, you're unlikely to make money. With level II trading, I enter before the chart shows that it's a long or a short and can minimize risk extremely well while still trend-following my winners, - taking trades with a 70% chance of making 50 cents + and a 30% chance of losing 8 cents. Technical setps that repeatedly work in a statistically significant manner without an individual trader using human judgement as to what the setup describes and when it should be applied? That won't happen. The setups I will freely tell you about using LII and the prints (and have, in other threads I can refrence you to) you can make a living off of.
I have been trading for couple of Months, so please pardon if my stock language is not as good as you guys. 5 Minute chart, i wait for breakout stocks then i try to short them. i usually wait till i see some red on the candle chart. I usually work with long range moving stocks which will move 50 cents to a dollar in seconds. I have been profitable so far but i just don't think it can be this easy. Profitable meaning (50-100 dollar days instead of -50) Please feel free to let me know if this is really a strategy that people use or i am just getting lucky. ET rules
Can it be done just using market depth -- only showing size total for bids/offers at same price -- instead of Level II? A standard IB margin acct doesn't include LII and I haven't decided whether it's worth springing extra for.