Evening trading US shares

[Mr. Charts]

Unless there is a very strong news story driving a stock's price, I prefer never to go against the direction of the overall market or the sector. No point spitting into the wind....
Richard

 

[Mr. Charts]

This afternoon has been choppy, but there are almost always nice trending, bouncing, break out stocks to find. For instance I've had a nice gentle swing trade on pure charts using 5 min candles on TRA gaining 80c.
I scanned, found the stock, put it on my watch list, liked it so much I put it on a chart on a second screen and kept an eye on it till it approached its high, then went long when it broke out and held it till the trend showed signs of dying.
I did much the same on FCSX, it broke out then failed and was a scratch trade.
Also a short on GILD which failed and I lost 4c on that.
Out when they don't work; stay in when they do.
OK, they are not all as easy as that, but enough are to make trading enjoyable and profitable.
Sometimes I think we all make the business of trading a bit too difficult. It can be hard, but if you wait for opportunities like that and don't over trade you can do it, imho.
Enough rambling.
Richard

 

[belflan]

The stocks on my pre-market watch list didn't set up as I wanted so I didn't trade them.
I only traded three times this afternoon, fewer than normal.
I do like stocks with clear movement as they tend to move more reliably.

The first was XRAY which was trending nicely down. The short was on the X hairs and I exited at the time of the image as the momentum appeared to be dying on level 2 T&S.
The latter usually provide the trigger to my set ups and usually the exits too.
That was a 30c per share profit.
Richard

Hi Mr Charts,

I'm trying to learn all I can about US stocks and how to trade them.

If possible could you post screen shots of your level 2 and T&S of these trades and explain your reasons for entry and exits.

thanks
belflan

 

[Mr. Charts]

I'm about to go out, but will reply.
Richard

 

[Mr. Charts]

Hi belflan,
Unless you take screen shots at the time you can't produce images; you can't scroll back level 2 T&S and show depth of market with players lining up at the bid and ask.
I will PM you a two word message which is my real name and if you then google me you will find three videos on the web which show examples of me reading level 2 & T&S live.
I do have a large library of images of trades I've done, including level 2 screens, and I'll see if I can find an example which you might find interesting and post it on this thread.
I must emphasise level 2 T&S, which I call MicroAnalysis, is sometimes extremely useful in timing entries and exits, also keeping you out of trades like break outs which are more likely to fail and finding the starts and ends of moves. However, a lot of the time the screen is just producing noise and is insignificant. It's that smaller percentage of the time when it is telling you a move is about to start or end when it's totally priceless. In other words it's a tool which is sometimes applicable and very valuable, but not always; nothing is infallible, it provides an additional but powerful edge.
Richard

 

[belflan]

Hi belflan,
Unless you take screen shots at the time you can't produce images; you can't scroll back level 2 T&S and show depth of market with players lining up at the bid and ask.
I will PM you a two word message which is my real name and if you then google me you will find three videos on the web which show examples of me reading level 2 & T&S live.
I do have a large library of images of trades I've done, including level 2 screens, and I'll see if I can find an example which you might find interesting and post it on this thread.
I must emphasise level 2 T&S, which I call MicroAnalysis, is sometimes extremely useful in timing entries and exits, also keeping you out of trades like break outs which are more likely to fail and finding the starts and ends of moves. However, a lot of the time the screen is just producing noise and is insignificant. It's that smaller percentage of the time when it is telling you a move is about to start or end when it's totally priceless. In other words it's a tool which is sometimes applicable and very valuable, but not always; nothing is infallible, it provides an additional but powerful edge.
Richard

thanks for the reply, i'll have a look

I'm not sure i'll ever use Level2 or T&S in my analysis, but I think it's good to have at lease a basic knowledge of all area's of the market you choose to trade.

ta
belflan

 

[yacarob1]

I think you need a little more than a basic knowledge pal.

Gnassssssssssh, Gnassssssssssssssssh.Arggggggh

 

[belflan]

I think you need a little more than a basic knowledge pal.

Gnassssssssssh, Gnassssssssssssssssh.Arggggggh

not sure what you mean here, if I was not going to use L2 or T&S as part of my analysis, what would be wrong with having just a basic knowledge of it?

thanks for your post btw
belflan

 

[yacarob1]

A basic knowledge of anything is not enough to be good enough.

 

[belflan]

Hi belflan,
Unless you take screen shots at the time you can't produce images; you can't scroll back level 2 T&S and show depth of market with players lining up at the bid and ask.
I will PM you a two word message which is my real name and if you then google me you will find three videos on the web which show examples of me reading level 2 & T&S live.
I do have a large library of images of trades I've done, including level 2 screens, and I'll see if I can find an example which you might find interesting and post it on this thread.
I must emphasise level 2 T&S, which I call MicroAnalysis, is sometimes extremely useful in timing entries and exits, also keeping you out of trades like break outs which are more likely to fail and finding the starts and ends of moves. However, a lot of the time the screen is just producing noise and is insignificant. It's that smaller percentage of the time when it is telling you a move is about to start or end when it's totally priceless. In other words it's a tool which is sometimes applicable and very valuable, but not always; nothing is infallible, it provides an additional but powerful edge.
Richard

Mr.Charts,

i had a look at your videos (the figures are a bit unclear, but i think i get some of the aspects of your set-ups, well the one in the videos anyway)

i've a couple of questions (if you have time)

1. Is it only certain types of stocks you trade this way?
2. If so, how are they chosen?
3. They seem to be very short (1-5min scalps) to make money at this I take it your position size is quite large? do your experince alot of slipage?
4. Do you experince alot of B/E or small loss trades to wining trades, trading this way?

thanks

belflan

 

[belflan]

A basic knowledge of anything is not enough to be good enough.

I think your misunderstanding what i'm trying to do here. (this might be in part due to me not explain my self well)

I know little about Level2 or T&S, I'm trying to get some backgound knowledge on it.

I know it is not necessary at all to use L2 and T&S to trade successfully (I'm just interested in how others approach the market)

I just want some back ground knowledge

thanks
belflan

 

[Mr. Charts]

Hi belflan,
1) Yes
2) I look at a chart which is thrown up by my preparation and scanning and see if it's likely to set up one of the patterns I like and is easy to read on level 2 - if it's very volatile and/or I can't read it it's ignored. I'm very risk averse, sometimes too much so.
3) Sometimes they are short term trades or both short and longer (scale out and keep some for a longer run). Position size is often related to speed of movement on level 2 and support or resistance on level 2. The latter point is much more involved than you would expect and full of fakes.
Slippage is rare as I can see liquidity on the screen in front of me and I don't go for illiquid situations.
I also use MicroAnalysis as a tool to refine entry and exit for longer time trades.
4) I will PM you my hit rate as writing it openly would, from experience, produce disbelief.
Richard

 

[belflan]

Hi belflan,

2) is easy to read on level 2 -

Do you find some stocks difficult or imposible to read of L2 (example would be good)

3) Sometimes they are short term trades or both short and longer (scale out and keep some for a longer run). Position size is often related to speed of movement on level 2 and support or resistance on level 2. The latter point is much more involved than you would expect and full of fakes.

Does this mean there is different type of support/resistance level that maybe, would not be shown on the charts (ie bids and offers, but not actual trades) I don't really understand this bit to be honest.

thanks
belflan

 

[jayjay121]

Do you find some stocks difficult or imposible to read of L2 (example would be good)



Does this mean there is different type of support/resistance level that maybe, would not be shown on the charts (ie bids and offers, but not actual trades) I don't really understand this bit to be honest.

thanks
belflan

belflan, go to viperspeedtrader.com, take a look at the videos there, they show you how viper uses levell 2 on his dom, also search scientist on elite trader, he has a great thread there on how he reads levell 2. I use my depth of market on ninja trader and see the orders being pulled (fakes) all the time when market is ranging especially, following vipers methods i can normally tell when its a fake or not. If you look at your chart along with the levell 2 you can see at what price level orders are waiting (s&r and stops).



jason

 

[belflan]

belflan, go to viperspeedtrader.com, take a look at the videos there, they show you how viper uses levell 2 on his dom, also search scientist on elite trader, he has a great thread there on how he reads levell 2. I use my depth of market on ninja trader and see the orders being pulled (fakes) all the time when market is ranging especially, following vipers methods i can normally tell when its a fake or not. If you look at your chart along with the levell 2 you can see at what price level orders are waiting (s&r and stops).



jason

hi jj,

I don't know of this viper guy or scientist. Maybe others do know them and could comment on if they are profitable traders or not?

thanks
belflan

 

[Mr. Charts]

belflan,
I made some relevant comments on another thread:
http://www.trade2win.com/boards/first-steps/30930-stops.html#post418866

You've got to remember level 2 & T&S is a tool which is sometimes useful, sometimes not; it's certainly not a "holy grail". Nothing is.
What it does is to give you a deeper understanding of what is going on, but you have to distinguish the noise from the significant - and some stocks are unreadable on level 2.
FWIW the difference to my own profits was an improvement of about 20-25% when I started using it.
Richard

 

[Mr. Charts]

...or to be more precise, when I was used to using it.

 

[Mr. Charts]

This is a chart of a trade when I shorted on the X hairs and exited at the time of the screenshot.

 

[Mr. Charts]

This is the level 2 at the time of my exit - the time of the last image.
Now it could have fallen more but the evidence was that on the strong balance of probabilities, it was about to bounce - and with virtually no evidence on the chart itself that it was going to rise.....
It did do so, rising 27c in the following minutes.
I'll leave you to figure out why I covered
Hope that helps or is interesting.
Richard

 

[Mr. Charts]

Another point to emphasise here is that you don't always get such a clear cut appearance on level 2 & T&S, but when you do, then it's significant.
Richard