A great trader does not need to trade the market, He trades his own ideas. He lets the market confirm his ideas. Now why would any great traders need to "adapt" to the market? Example: Warren Buffet thinks BUD is a good investment, He puts down $800 million or whatever. Does he require to adapt to the market before dropping his money? He knows his stops before he enters. He puts his position. He does not care what the market thinks or needs to adapt to it. Either your ideas are right, or they are wrong, Market is only there to confirm or error.
There is a game commonly played by Specialists which some people call "weak hands", in which they show big buying orders attracting people to later pull the orders making "weak hands" dump their stock at any given price. Should the Specialist be blamed for this evil procedure? I don't think so, people are the only responisible for entering trades in stocks they haven't seen trade before. When it ever happens to me in a stock I erase it from my filters. I trade no less than 200,000 shares a day, so in order to ensure my profitability I only trade those stocks in which I'm sure that I'm not going to get f...ed in a non-liquid stock in which the Specialist can be the only buyer in 1 mile. If you don't want to be tricked do your homework and trade those stocks in which the Specialist can't "play games" with you. But never blame him, you are the only responsible.
And what does a good trader base his "ideas" off of? You dont just arbitrarily put on positions do you? No, you make judgements based on what the market is telling you (price, charts, tape etc). You can think your ideas are wonderful and amazing, but if they dont conform to what the market thinks, then you are wrong. The market dictates what you should do, not the other way around. Man, CW, i thought you were better than this. The newbie in you is resurfacing.
Do you really need a specialist to blame? Watch the price action on any electronic market and you can pick out the same head-fakes, shakeouts, and other modes of deception as seen at the NYSE. When everyone is competing for the best possible price, the games just evolve naturally.
As much as I hate specialist scum and my favorite ones are dead ones or those in prison, I have to agree with you when it comes to sector stocks. In other stocks I used to have favorite specialists, like WLT back in the day or FSH, MHS, CIT and HRB back back in the day, but once the mooks & Wall Street gets to them, the specialists turn to pure bastards, so f**k them, their families and the horses they rode in on. X, NUE, AKS, OS, LEN, PHM, HOV, DHI and TOL/RYL/CTX ( to an extent) are electronically dominated stocks which are controlled by hedge funds, traders, computers and index arbs. The specialists in them do nothing more than scalp spreads and pinch daytrader orders for pennies or whatever they can. Maybe on occasion when there are unique buyers or sellers and sector action is not significant & correlated, the specialist T&S may become significant but overall these guys simply do not have the key order flow. If you get faked by those size flashes in X or NUE, you're either a newbie or just too stupid to catch on to the fact that size in those stocks means nothing, be it on Open Book or the floor or even ARCA. Tape reading those stocks, at least for me, gives false signals because there is nothing to taperead besides the spread scalping by the specialist. Of course, a confirmation by the tape is always welcome, like a buyer/seller stepping in on the floor instead of fragmented size in OB/ECNS, but that is not primary at all, sometimes even insignificant. Every time X flashes one of those 50k bids and Im long, I get ready for a shake out and put up bids on ECNs for the fake exaggerated spread downs as the mook shakeout proceeds (if the key indicators still confirm my long position). I do not touch oils or coals or certain homies like KBH because of the specialist slippage of scalping spreads (30 cents is too much to give up to specialist scum in this market). However Im pretty sure those stocks are also primarily controlled by hedgies and index arbs, hence there really is not anything to taperead unless there is a unique buyer/seller. Think what you want, I just noticed that I stopped paying that much attention to the tape and have had good results with playing sectors. Much higher average profits and a much better net profit/commission ratio. Sometimes I do not even bother trading nonsector plays with tapereading because it's a worse risk/reward ratio. Way too many mooks & tapereaders to fight with, along with the specialist and a decreasing institutional participation. P.S. Steve stop wasting ur time with Coolwhip
traders play as many games as do specialists. that is the game. it is called trading. what some consider illegal activity is usually situation where other traders have an edge over you. when a stock is climbing higher, traders are creating the move, not the specialist. the specialist does not have as deep pockets as many would like to think. the stock is moving up because it's participants, the traders are aggressively buying higher levels. when there is low activity.. traders feel as tho they are getting screwed, when in fact they are paying a wide spread and losing during what is probably a directionless day.
I'm not sure I see the point of this thread.. its like saying - because I can read english - its my favorite language... kind of stupid IMO. The specialist isn't out there to screw you (in all but very rare cases), she/he is helping you enter/exit the market - all the while keeping price transitions balanced. Am I the only one who thinks this way? The specialist does not create a 1 point move, buyers/sellers do... I find the specialists to create nice orderly flow and frankly, I appreciate them. If you spend enough time watching certain NAZ stocks spazz out, you'll see what I mean. The only significance is in interpretating certain actions by specialist as being strong buyer/seller motivated. Mike P.S. AGN has been moving nicely lately.
Uhm, I wish I could play the same game as the specialists and have control over order execution & access to order flow info. Maybe I can fake size also but if I get grabbed I get filled while the specialist can easily back away at any time, I have seen this happen so blatantly it's not even funny. The specialist does have to play games sometimes to fill his clients but unlike us, he takes near zero risk no matter what he does. Same goes for inside trading and use of non-public info, it's not really a fair edge, it's exclusive rights for the elite and a kick in the nuts for the rest.