I have been trading mainly by reading charts, and assesing probability of short-term reversals. I trade NYSE stocks, and do pretty well. I never have tried to read the specialist's intentions, but would like to learn how. What should I look for? Where and how can I learn? Thanks for any tips/suggestions!
First and foremost pay attention to Time and Sales it's the most important part. What's happening over there can show you what he wants to do. second, Does he suddenly slip below Chicago, Pacific , Boston, NASDAQ, and the other exchanges on his bid or offer heavily. He's got the book they don't. It's wise to follow him third Then there is the times he will post 500000 on the bid or offer. Some do this to scare traders......others actually post what they want to do. Probably best to join him. rtharp
The best way is to take your 3k position and constantly buy and sell the same 100 shares to see how they position it. On cyber you can make all the trades you want in 5 mins for one ticket charge, and the nickle he scalps off you won't matter if you're taking him for 3k shares. This only works in the illiquid names. But if you see lots of 100 share buys and sells over and over in a stock, it's probably me. (hehe). Based on where you're filled with limit orders, you can tell what he's doin.
Could you give us an example of how you would read a specialist by buying 100 shares over and over again? What information are you aiming to glean from the specialist when you place 100 share orders?
I want to know where im filled, if it's near the bid, ask, or in blox. That tells me if he's buying or selling and if there are other hiden orders. It's hard to explain more, cause it's all specific to the stock, the situation, and most importantly the specialist. I keep a notebook on every one i trade and what their quirks are. That's the best way to learn.