Tape Reading Observations

Discussion in 'Professional Trading' started by fatrat, Nov 2, 2005.

  1. fatrat


    I'm a newbie trader, and I trade expensive stocks [with mostly success], anywhere from $70-$100, on the NYSE.

    A lot of times I see guys with big orders on the bid or the offer. Then, no one actually hits the offer. So, I see the big order get split up in half and adjusted so the offer drops even further. Then I see a sort of leap-frogging of sorts up until a point where both groups of orders are eaten up by buyers.

    If no one is eating their shares, it seems equally likely to me that getting short / selling shares around even a penny or so under levels where they are showing their offer is equally as difficult given the uptick rule.

    The uptick rule in this scenario is a huge nuisance, because I can't seem to get a fill at any reasonable price.

    Does it actually make sense to widen my acceptable loss risk and try to find a buyer before they go crazy and start leap-frogging all the way down? Does anyone out there actively exploit this scenario when they see it and actually make a buck off of it?

    I see this happen over and over, and can never get short before the stock plummets. If I -do- get short, it's usually around the point when the buyers take over -anyway-. So, the whole thing is kind of screwy.

    ... Also, is it inappropriate to talk about things like this in public forums? I mean, is this considered asking for another trader's edge? I guess I'm just asking how to short with the lowest risk possible.

    ... While I'm posting -- where do I get a list of stocks without the uptick rule?
  2. fatrat


    I should mention that when I see this happen on the buy-side, I'm almost always making money on the setup. It's just the short side that is driving me crazy.

  3. Find a few stocks you trade well and get some conversions on them. If they move well, they will pay for themselves in a very short amount of time. I got a conversion on this one stock the other day and it cost me about $400 for the month and the first day I used it I made about $2500 in that stock. So it was worth it!!

  4. fatrat


    Pardon my ignorance -- What is a conversion?

  5. Second that - conversion?
  6. A conversion is a synthetic long position, I believe done by marrying puts, which allows you to sell on downticks (thus avoiding the uptick rule). I have a couple 1000 share conversions in a couple stocks and this has made trading the short side 100X easier. It costs a certain amount ( I believe mine costs about $400 each for the month, plus you may have to pay the specialist a premium for getting you the conversion). If you trade a stock often and have success, then its definitely worth it.