Level 2 Tricks vs. True Intention

Discussion in 'Order Execution' started by dedicated1, Feb 1, 2003.

  1. F. d'Anconia

    F. d'Anconia Guest

    5. Watch T&S in tandem with L2. If prints are going off at the price, if the bids/offers are being taken out. No T&S prints? - they are being pulled (not real buying/selling interest).

    6. If your charts are telling you something, don't do the opposite based on what the L2 looks like. Charts aren't the most reliable, but are more reliable than L2.

    I have reposted 2 of fl traders points in his post that I think are extremely on the money. I was going to offer my 2 cents here but he basically beat me to it. My favorite play is the middle to late afternoon breakdown (nasdaq stocks). Some people call it head and shoulders but to me thats a dandruff shampoo. I just call it the first lower high after a protracted uptrend that lasted the morning and for most of lunch. You can usually bet on one of these around 1:30-2:30 pm if the market is reversing its course that day......................

    Anyways, once this first lower high is made let the stock drop to its next support level (usually some point where it pulled back to earlier in the day). When the stock rallies from this point is where it will be shortable. It is at this exact moment maybe 2-3 5 minute candles at the most where I think you see the most Level II manipulation. I often pick the exact top of these retracements to short, simply because of the divergence between what level II is showing and what is happening on T&S. As the stock "rallies" watch its volume which should be low. As it runs out of steam and stalls at the top, you will very often see the bid side increasing and MM's outbidding each other. They will even pull their offers of course. However, T&S will NOT correspond. You will see practically nothing go off at all. There will be a short-lived frenzy on the bid side but very few trades (if any at all) will go off at this point. Short into that. The stock should easily make that next lower low and continue downward till at least 3pm if not the entire rest of the afternoon..................

    As far as getting psyched out of good plays with level II, shut it off as soon as you enter. My hold time increased greatly when I started minimizing level II upon entry and just watching the candlesticks form. It makes a huge difference emotionally and when you don't see all those prices jumping around, you are less apt to kill a profitable trade or exit early.

    best wishes to all here........................
    :)
     
    #31     Feb 4, 2003
  2. I'm hoping this thread will keep going, as I think it's a good topic, unlike most of the drivel/whining on ET.

    Regarding the MMs requirement to print their trades, I believe on block trades they have a window of 90 sec. or so to print.

    I don't factor this into my trading since I'm concerned with the trades that go off on ECNs and Supermontage, which print immediately, or close enough. So I'm not concerned with MMs "holding back" their prints.
     
    #32     Feb 22, 2003