I wanted to see where some others stand who trade the NYSE market stocks based on the theory that you are trying to find stocks that are liquid and follow the futures. I guess it is kind of like the theory that Bright trading has of trading the same few stocks everyday that are liquid and follow the market and mainly using tape reading strategies. For me I have noticed that this type of trading has become very hard as of late. So many of the bigcap stocks are not following the futures that well. It is more apparent on days like this where we have huge future moves but the stocks do not seem to respond that well making it very unpredictable to trade them. What are some of the things that you are doing to combat this problem? If I continue to trading stocks I am thinking I will have to widen my timeframe out again and go back to trading off charts and rely less on tape reading. It seems very difficult to pick up anything meaningful from the crappy tape we have been having and if anything jigs you out of good trades because of the way the stocks drifts back and forth printing large blocks on the bid and offer yet still overall going up. Any other thoughts from those of you that have been trading this way and any kind of changes you have been making would be great.
"If I continue to trading stocks I am thinking I will have to widen my timeframe out again and go back to trading off charts and rely less on tape reading." sounds like a good idea to me. I don't see how you can read the consolidated tape over the internet, not see any order flow, pay commissions on every trade, and expect to beat the floor traders at their own game. Its futile in the long run, there is no edge there.
tape reading takes time to learn and each specialist moves his stock a little different...try thinking more like a floor broker on the exchange filling an order for a client...you are trying to buy at the lowest avg price and sell at the highest avg price for your client..so if you have a big order you will use the supply on the futures movement to your advantage and keep your avg price better...take a look at CAH from today it was obvious that there was a size buyer but he didn't pay any price to get his order filled,that was the late 90's now they feel more confident of getting the order done without pressing too much. Also from my experience anything that makes the most active list is that much harder to read..look for stocks with decent, not huge volume. I am no expert tape reader by any sense but have a decent working knowledge after reading tape for 3 years on listed stocks.
I actually trade a basket of nasdaq stocks -- try to trade them like the futures - the price action has been very aggravating and choppy - extremely difficult--futures moving - stocks not -- I am thinking of going to futures -- can you trade futures ???
The way a lot of big cap institutional floor trading is done is by spliting prints (ie. participate with the buyers or sellers). Tape reading is much more effective in non market stocks, or stocks where there is news.
I trade with Bright, mainly large caps and read the tape. I agree it has not been working very well latelly. However, you should try a role reversal with the speacialist, if you only trade a couple of stocks, after a while you kinda figure out the speacilist, and start thinking the same way he does and maybe predicting some of his moves, based on the tape action. I mean that the tape action by itself, but you need to know your specialist. Like MMM, large cap, expensive and liquid, and the specialist is somewhat consistent in his behaviour. Let's say futures are crashing and MMM is rock solid, and sometimes even upticks a bit, you will probably see a couple of large prints, a little sideways action with a penny spread showing 1X1, and then suddenly the bid will drop by 50cents or so and it goes straight down from there. The trick usually is to wait and get in short, only after the specialist has done his little dirty tricks and shaken everybody out of the tree. There is also the LEH guy, if you can detect a big buyer and he dissapears for a while, with again a peeny spread and 1X1 market, try to get in because specialists next move will be dropping the bid, a mid size print near the ask, and them he will spread it up (the ask) by 50 or more cents. Might also be usefull to watch the sector indexes, the bond futures and the euro futures(which has been working quite well) Bu then, if I knew what the heck I am writting about, I probably would not be posting it here for free. Good Luck
not assuming you trade futures, but alot of traders here do, somoene tell me what the edge is in trading futeres; as far as i can telll there is less edge in futures