Hi! Can some explain in detail how program trades work and what stocks and/or time frames should traders avoid while trading? I read several post from traders that mentioned certain stocks to avoid do to program trades. Thx
The program trading going on is an advantage to you. Read up on how the programmed trading is detected and the fact that in detecting it you also get to see the direction that will result for the given move. Since you know these two things. You can trade very effectively. For leveraged markets there is another advantage as well. They operate in a way that is not quite in synch. It is like looking at a sound and its echo or reverb. You watch both and only trade the echo. What is nice about programmed trading is the volume it creates in equities. Focus on high beta high quality stocks primarily. The low beta high volume stocks (like blue chips and S&P stocks) do not make much money since their price movement is particularly constrained because of their relatively lower quality and their large floats. Programmed trading is a thing that is done where the players have to substitute something else for high velocity profits in money making. What they substitute is statisticulation and giving up on fundamental analysis longer term trading. For unconstrained traders (retail primarily) the field is the whole potential that the market offers and so we creme off the very best offered by running ahead of the herd and the programmed trading folk. These days some of the monitoring platforms are beginning to put more tools in front of traders. they actually seek input from high velocity traders so their software becomes more salable. Because of the huge bulk of programmed trading it is more easily used to gain an advantage in making more money per day. You may be reading stuff from people who have been on the wrong side of programmed trading. There are a lot of things to not be on the wrong side of. as time goes by you will notice these kinds of whiner themes. Whiners are more common than winners it sems.