Ok, i see what youre saying. and yeah $5 stock, makes sense to trade 5k shares, or whatever. get 10cents make 500. i know it feels like youre reading the tape and the level 2 and maybe you are, maybe it can be done. not my thing. but in my world there is usually a reason (based on the chart) for why price goes to whatever extreme it does - even on days like that. 15 min, daily, weekly, etc. do you use these? im guessing the guys trading 100k shares a day are making good money. do they share with you what theyre doing? what they look for? or are they just scalping the spread? i guess money is money.
Have you considered some type of modified anti-martingale scaling? Something like 4-2-1-1-1 or 2-2-2-1-1-1 etc? As discussed before the pure anti-martingale 1-2-4-8 etc doesn't work too well unless you have a defined exit point, which of course limits gains.
ok, now i see what you're saying about position sizing. absolutely i agree giving good trades more room. Part of the answer to that (and to holding them longer) is really being strict on yourself about the quality of trades you take. I use to cut my trades off because i never had any confidence in them and would take small profits as soon as I saw them. If you know you are taking a good trade it is easier to pony up on size and let them ride. My best days i usually make about 10 round trips total.
I'd rather not state what they do in public, as its not my place to do so. But yes they do share. Yes I make use of multiple time frames, specifically the daily, 30 min, 5 min and 2 min. The level 2 is very important for day trading. You do not NEED it, but it is a fantastic tool. You're in a stock. You're only looking at charts. You're in the money! Feet are bouncing. I have a great trade. The price begins to slow. You haven't hit your target yet. You're saying, "come on baby! 7 more cents, pay me!!!" Then the price instantly reverses to your entry. "DAMN IT. It's ok, I'm happy, I followed my plan." If you were watching the level 2, you would have seen the seller step in the stock, buying dry up, seller comes a few cents lower, and everyone panics out. If you had been watching the level 2, you would have had your outs. And the events that occurred would have been absent on your charts. The level 2 allows you to get better entries and better exits. Sure you can make money without them, scores of people do. It is just another tool at your disposal. Personally, I don't see how an intraday trader could live without it. It is not nearly as useful for your mega caps where volume is HUGE. Not nearly as useful in the financials, maybe that is why you don't see a need for it. Thick stocks with heavy volume often do not present any useful information. Though, it is important to understand that ALL stock charts form in RESPONSE to events in the level 2.
With scaling, I think it comes down the probability of different reward targets. You buy a whole number. You feel very strongly, due to the factors involved and the time of day, that this has a high probability of going 50 cents, where resistance is. You feel it COULD go a point if the market makes another push up once at your target. I believe you should exit at least half of your position at a high probability reward target that obviously has proper R:R going for it. Honestly, exits are probably the hardest part of trade execution in day trading. There are a lot of factors to take in, and often, trade conditions change after you have entered. Initially, your target was 50 cents, but now the market is roaring and there is aggressive buying around 50 cents and heavy bids in the high 40s. You make a decision to hold and not sell any here. You set a stop for that portion you planned to exit just below the heavy bids. Or, lets say your target is almost reached, but a huge offer appears at 48 cents. Are you going to let a top before 2 cents ahead of your target? Take some off. Different targets have different probabilities. These probabilities tend to change once a trade has begun. Good traders, imo, make good adjustments during a trade. It is always safer, for newer traders, to follow a stricter plan, as it takes experience to successfully alter your plan during a trade. Based on your total share size, calculate what combination would yield the best results. These probabilities change as you're in the trade, and you have to adjust your plan accordingly. Others like to stick with their initial plan, which is often a nice, consistent way to do things, but I think you miss out in the end. The REASON it can be good to stick with a pre-determined exit plan is that our emotions tend to distort probabilities while we are in a trade. We are in the money, we feel good and boost probabilities to the next reward. It is important to find the right balance. ------------- To answer, if you expect a move to last much of the day. you exit like this 1-1-1-2-3-4 if you expect a move to last 15 minutes 2-4 if you are unsure about how good a move can be 1-4-2-1-1-1
4/1/11 Gross: -14 Shares: 14,600 Net: ~ - 108.90 --------------- Well, great way to start April. Started off trading well, breaking my old habits. By the end of the day I was dabbling all over. If I continue to not respect the concept of selectivity, you will see why I am gross positive and net negative. Today for instance, I basically gave back my last two days via commissions. It is absolutely imperative I produce larger positive days by getting size on A+ setups. Today, I did size up on good setups, and as you will read later, I was so close to a great day. When I left for lunch today, I felt good about how I had traded. Now, at 4pm eastern, I am very disappointed with the person that took over the controls in the afternoon. ----------------------- Notable Trades 1. HALO had coverage initiated on it this morning. I got 500 shares as it broke $7. Sold in the mid to upper teens, and 100 right at highs. 2. Bought 500 BEAV as a seller was holding it at 47 cents at around 11:20 eastern. The idea was, if the seller gets taken out, BEAV could possibly get a push to highs. Didn't happen. When I noticed the lack of energy in the low 50s, I set my stop at 47 and went to lunch for a minimal loss. 3. Lost money trading ARUN today. RVBD and FFIV were very weak, dragging the cloud with it. I went for a bounce around the 33 area. ARUN did not want to cooperate with the others. Typically I am pretty good trading these cloud names, though today it was not as easy. Probably since it is a Friday. 4. GPN Let's talk about GPN. GPN was an absolute shit show. I am extremely upset with how this trade developed. Go look at a chart of GPN. You will see buyers driving it up to 50. There was large NYS size at the whole. At the time, I didn't detect a lot of volume / bullishness. I shorted 200 shares at 97 cents. If they began to pay the whole, I would flip. Well that is exactly what happened. Suddenly, the thickness in the high 90s was taken out and the whole was attacked. I loaded up 600 shares. It just barely missed. There was a panic sell once it failed. I held. It came back up to the whole. I set a stop at 90 cents in case it couldn't muster the energy. The stock could not get through and stopped me out at 90 cents. GPN then collapsed as all the day trader weak hands bailed. I was pretty upset. I knew the dip would be a good buy, but I didn't buy it. Eventually GPN bounced back to the whole. Now that all the weak hand day traders were out, it blasted through the whole and went 80 CENTS. I got 300 shares AFTER it broke to ensure I didn't get screwed again. Sold 100 at 18, 100 at 38 and 100 at 45. 50 cents was my target, the 80 cent move was incredible. I then bought 100 on the dip back near the whole. 5. DOV. Bought DOV through highs @ 67. 200 shares due to the time of day and uncertainty about what it could do. I saw a buyer step up and raise the stock price on the bid side. I felt good and held. Sold 100 at 19 cents and 100 at 35 cents. I kept watching. DOV became a bit extended. I knew exactly why the price was rising --- the stepping buyer. As soon as the buyer left, I got short 200 shares. I then covered a few cents above the 5 min 10 period. Good trading all around in DOV. 6. The latter half of the day was not good for me. I tried bottom picking FTNT. It did not hold 40. It gave a possible indication that 40 would hold. However the market began to make a sharp move lower, and other tech names sold off. FTNT had a panic sell down to 39.30, and THAT is when the selling dried out. It then made a nice 1.5 point move higher! I was too early to this one. 7. Shorted JOYG as it was making a lower high. Shorted at 102.89 as buying dried up in the 90s. I did not expect a move all the way to 102. I covered at 65 cents, a high probability, 2:1 exit. 8. Also lost some money in AVAV. Tried bottom picking, as I didn't think the news was all that bad. I did catch the bottom, however, I lost $$$ in it earlier buying near the bounce up to 31. I though 31 was going to hold. The slippage crushed me. ----------- GPN is the type of trade you have to completely dominate. Obviously, if I had resized up to 600 shares when GPN finally broke, I would have had a fantastic day. However, the flush out earlier had filled me with emotion. Looking back, I had some great trades today, but I still dabbled around too much. I am making it a point to get size where necessary, but I simply traded a lot of mediocre crap today. In these panic reversal trades, it is important to only take the trade when something in the level 2 makes it absolutely compelling. Normally I am much more conservative with these... though today I was just buying levels and hoping. Honestly, I never do that BS, I guess cowboy K. Smetana took control after lunch. ------------ That all being said, I was down gross $162.50 at 1:20 eastern. I was able to cut my losses. So, it could have been worse. I stuck with it and cut my losses. Next week is the first real week of April, and I will continue to apply focus to my position sizing (which I feel has been improving), and I will tighten up a bit on my selectivity. Today, I was just way too loose. EVERY DAY, bad ass opportunities present themselves. It is silly to get involved in stuff that has you worried as soon as you enter. ----------- P.S. I went to the gym last night, and the chick didn't show up lol.
I forgot to post my execution list on Friday, my bad. Monday Gameplan: I will be watching the following stocks for any interesting setups: +5% on Friday: ALEX, CBE, MDVN, OPTR, UA, VHC, TDSC, NDAQ, WPRT, WNR, VRX -5% on Friday: FTNT, FFIV, OCLR, RECN, RVBD, AVAV, CPX, AMED, RBN, DMAN I'll be looking on the long side. I may pop in a 3x bull ETF near the open. If the market makes new highs, there will be a lot of 52 week high breakout plays coming. Time to run the screens. I am hesitant to make long term market predictions, I feel there is a lot of headline risk out there. If I had to make one, I'd say we make a new high, via a lopsided market, we once again correct after lackluster earnings / data in the summer months. I think we begin to see the effect of oil around that time period. We then make another push up into the holidays, producing a head and shoulders, or just a sideways market. Hey you heard it here first. I am at the point where I think the market has come far enough without jobs. It seems silly to trade anywhere near 2007 levels. Any positive development in jobs will lead to interest rate hikes. I don't see housing rebounding any time soon. Dollar continues to weaken. I am very eager to see if anyone actually buys up at 1400. I think that is huge resistance if we get there. I think the buying will absolutely dry up. Well, that is probably where wall street begins selling shares to their clients / retail. Point being, we will soon be at levels where I feel the risk reward truly favors the short side. 1450 is as high as we get, and I'll be very shocked if enough morons actually buy up there.
Housing recovery hasn't driven this rally. Any hike in interest rates won't be a huge surprise to the markets. The Fed will definitely telegraph any upcoming changes in interest so as not to spook the markets. The market will more than likely blow through 1400 soon enough. Just my opinion based on what I'm seeing in the market.
you have any screen shots of charts you use? or are your entries/exits primarily based on how the L2 feels to you? i know you said you believe L2 (bids/asks) determines what shows up on the chart - and this really SHOULD be true - but what if price were going to certain places anyway -regardless of what they might want us to perceive as "buyers"/"sellers" stepping in, holding things up/down, etc. ?? what attracts price to certain points?
I use 2min, 5min, 30 min and daily charts. 10 period, 20 period, 50 period, and 200 period on each. Very basic. I think indicators are a joke. The only indicators I like are the moving averages, and only because I see them work a lot. I SEE programs using them all the time. I think RSI, MACD, etc etc are all bull. People find ways to use them and discover ways to put the odds in their favor using them. That does not mean they are predictive of anything. If a stock is extended, of course it will be "overbought." When an RSI says we are overbought, the RSI doesn't stop the buying. Events in the level 2 stop the buying. You could say people use the RSI to tell them when NOT to buy, and to tell them were to expect selling. You take a trade based on the RSI, and guess what? People still buy! You lose money. If you would have looked at the level 2, rather than past data, you would have made a better decision. That is my opinion on it. If a stock looks extended, I don't need a lame RSI to tell me. I think you were making a point though, about what "they" want "us" to perceive. You are absolutely right, the box is manipulated all the time, but MORE so at times not near key levels. If you are at a key level, you tend to have real action going down, not fake bids, etc. Real levels are IMPORTANT. They are where buying and selling matters most. If levels are broken and especially closed across, people take it seriously. Furthermore, stocks that are "in-play" are not as manipulated, in my experience. In-play stocks have real buyers and real sellers, real psychology, real volume. People screwing around in those risk getting beaten down. It is the light volume, out of play stocks that have the playground effect going on in the box. The level 2 is MUCH more useful at areas of support / resistance, rather than anywhere in between. However, there are many, many times where information comes through that completely changes the probability and strength of your trade. A green bar on a chart will not show you the huge bid driving the price up. Sure, at any moment someone could hit that bid and slam the stock. Nothing is perfect. But that is trading. If you see that bid get hit, you'll see it BEFORE the guys looking at only charts, giving you EDGE over them. You KNOW the trade has changed BEFORE their red bar appears. But to your question, you say that price will go where price will go. And, you are absolutely correct. HOWEVER, I am a DAY trader, not a SWING trader. I need to capture moves that are happening NOW. A stock could go 5 points in the next week, but I can only capture the 70 cents it is going to produce today. That is the most difficult part of all this. No matter how right you are about the market, you can only capture what the market is going to offer TODAY. You can get owned trading a great idea, and overnight, it gaps in your favor. Happens all the time.