Level 2

Discussion in 'Prop Firms' started by New Prop Trader, Feb 2, 2008.

  1. Hello Folks,

    I did research on Prop Firms on Elite Trader and joined one in the Boston area three weeks ago. I traded live (not simulation) for the first time on Friday 2/1 and lost $88.00 + $15 commissions = $103.00. I made a total of 10 trades with 100 shares each. My first three trades were positive, but lost it all and more to the lack commitment on my part, I did not commit to my stop/loss plan. I am now redefining my definition of risk management.

    I am currently gravitating to NYSE stocks over NASDAQ. In addition to using Level 2, Prints, and the Limit Book, I am using technical analysis. I find myself relying more on charts than anything else.

    Like majority of Prop Firms I can not carry any positions over night, so I would say that the trading style of my firm is scalping/momentum. Therefore, I want to improve my knowledge, skills, and pattern recognition in Level 2.

    Does anyone have any advice, theoretical or practical, beside me just staring at the computer screen? I know a lot will come with practice and time, but I want to help myself as much as possible.

  2. here are some of my suggestions.

    Pick ONE stock with a very thick price and lots of volume. . Get intimate with the stock. Love your stock. know it better than you know the back of your hand.Once you have this down you can increase your lot size and move over to more fast moving stocks

    Stick with NYSE stock as it tends to move slower and can prove to be great training for the new trader. plus costs are lower. learn to crawl before you walk. Although not to bad mouth NYSE traders because I trade NYSE stock and you can be as profitable as NASDAQ/AMEX traders.

    Learn to cut your losses quick. Do not enter a trade without having an exit first.

    Learn all your hotkeys...keep practicing. Speed is the key.

    Screentime, Screentime, Screentime. Watch the level 2 and T/S until your eyeballs bleed. Find it boring? thats too bad because these two things are important in your tools to successful day trading.

    Learn which ecns you can hit so you can reduce your commisions by adding liq and getting rebates. This is called rebate sensitive trading. Also know which ecns get hit first so you can exit positions quickly. T/S will definitely help with this.

    Did I mention learn to cut losses? No point in going for profits if your losses just eat them all up. you can loss a whole days profit with just a few bad trades.

    and lastly....

    make mistakes...you learn faster from errors, so that way you don't repeat them again. Also learn to cut losses quick.

    Happy Trading.
  3. Excellent post Tokyo. I would add that journals are important to identify what you saw, felt, risked, etc. when you entered the trade. Include charts with your buys and sells and look where you got in and out.

    When you make enough mistakes, do what makes you money and don't do what loses money. Some people only trade until 9:30, some trade only after 9:30, and some do both. It doesn't matter, just do high percentage trades.