I trade only NYSE. here are some tips 1) look at the bid ask spread.. is your stock always one cent difference? I trade a stock that gaps around wildly and its a great thing the specialist will reward you for playing his game.. here is an example ... tape reads... prints going off at the 100.00 even spread is 100.00 vs 100.01... all the sudden the offer lifts.. say 15 cents .. its 100.oo X 100.15 . on the tape there may even be a few 100.00 prints going off .. some stocks just stall out when this is happening .. by the specialist lifting the offer he is asking for sellers to come into the market.. which means he may have size thats not showing sitting on the bidd.. and he wants people to enter in .. and you will be rewarded for such actions.. i would enter in to go short at say 100.05 and because its NYSE he will do one high print and i will get the slippage.. something like 100.15 will go off with a large block. (of which will be a part of ) and then we will be right back to 100.00 X 100.01 where i am covering . (the reverse is true on the droped bid) hes looking for buyers. Also the specialist game is part of OPEN only orders which many have had good luck with (see Dons brights posts in the other forum ) altho I do not suggest this unless you are a avid new reader because one news stock creeps into your open only stock list and your .. as they say ... FLOCKED. Is that what your talking about? Rocco D.
Because he was satisfying a real buyer (on the floor or otherwise) and grouped your order into the 100.15 print.
Perhaps we are confusing ourselves here. First off, lifting offers means buying offers. The specialist "spread up" and thats where he satisfies the buyer and grouped your offer into the higher print. Now, he is allowed to sell his shares at 100.15 because that was an uptick. But he cannot hit bids on a downtick or lift offers on an uptick. Now, he could have one his buddies on the floor tap an offer or bid to set off stops but he cant do it himself. Either way, its generally a bad strategy to try and pick tops on the spread up because, if the buyer still has more to go, you can find yourself short into another spread up. Now, if the stock has made a significant move up and the specialist spreads up and puts on a nice finishing print (such as a large odd lot order like 45,670) then thats a great print to be short from most of the time.
you would think by the fact that I pretty much spelled out the whole sincearo the term "LIFT THE OFFER" (REFERENCING A HIGHER PRICE SHOWN) while still printing a lower price, or not at all wouldn't have led to confusion. "Widening the spread" is what I am referring to and if that caused confusion my apologies. your words here - "Either way, its generally a bad strategy to try and pick tops on the spread up because, if the buyer still has more to go, you can find yourself short into another spread up. Now, if the stock has made a significant move up and the specialist spreads up and puts on a nice finishing print (such as a large odd lot order like 45,670) then thats a great print to be short from most of the time. " about catchng the finishing print is what i am alluding too. and this is the issue about (THE TITLE OF THE TREAD) knowing how the specialist handles orders like this. I know GS does this at the very least 5 plus times a day all over 10cents a time. i do my best to participate in it every time. But that doesnt mean other stocks do this.
Even in this case I wouldn't just enter a trade against momentum. Spread up (down) + big prints is a pattern that I've seen again and again and it doesn't always signal a reversal (not even with a good probability, say > 75%). Is it the end of a large order or there is more to come? And how big a big order should be? If you're wrong you're risking way too much, at least for this style of scalping. Better off waiting for a sign of momentum reversal and hedge your order against some size in the open book (> 50 or more relative to your size, but 50 is really a minimum IMO).
"Even in this case I wouldn't just enter a trade against momentum" Agreed trading against the trend is dangerous, and agreed the presence of a large print may not be a good enough signal for a reversal, however I think the poster is using this strategy to capture quick, minor pullbacks. As long as you covered within the next 4 or 5 prints after the big gap print, I think one could be profitable. (they'd get crushed here and there but overall I could see someone making that work)