amit1986
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The long USD/CAD trade is working out nicely. Probably going to hold it out for a while to see if the USD gets to around 0.95 per CAD and then think of closing. Not sure how many "pips" that is, but should be nice gain.
amit1986
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Interesting setup on HGSI today. I didn't trade it, but it did what I thought it might.
Here's what I read pre-market on briefing.com regarding HGSI:
In reaction to this news, the stock gapped up almost 10%. And then, a few minutes before markets opened, briefing.com said the following:
I suspected the decrease in the stock may simply have been hedge funds/institutional investors selling the news during the gap up. Thus, there was no inherent reason for HGSI to be falling. So, I suspected that as the market opens, HGSI may crawl back up and close its gap as all the buyers come in on the good news. That's exactly what it did.
I didn't trade it as it moving too fast on level 2 for me to follow, but it just goes to show that common sense goes a long way in trading.
Here's what I read pre-market on briefing.com regarding HGSI:
In reaction to this news, the stock gapped up almost 10%. And then, a few minutes before markets opened, briefing.com said the following:
I suspected the decrease in the stock may simply have been hedge funds/institutional investors selling the news during the gap up. Thus, there was no inherent reason for HGSI to be falling. So, I suspected that as the market opens, HGSI may crawl back up and close its gap as all the buyers come in on the good news. That's exactly what it did.
I didn't trade it as it moving too fast on level 2 for me to follow, but it just goes to show that common sense goes a long way in trading.
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hey amit i just started tape reading today! though i was reading the time and sales of the YM rather than stocks, thing is i want to read stocks but not just ones which are completely algo driven correlated stocks...any personal favourites of yours that you would recommend for a noobie?
edit: taking in mind i don't have level 2 data!
edit: taking in mind i don't have level 2 data!
amit1986
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Chartsy,
I used to use only time and sales and I found it difficult to develop an edge. Once I started using level 2, I am finding a big difference. The thing with only reading orders is that you can't see support/resistance from the market makers. I do keep an eye on time and sales, but won't trade simply by seeing a rush of buying/selling. I need to see market makers and ECNs supporting the price action on time and sales.
I don't really have any particular favorites - I trade whatever I can read. Unfortunately, almost every stock is algo driven, but that isn't a problem once you spot patterns in their behavior. Sorry if this doesn't reply doesn't help as much as you had hoped...
I used to use only time and sales and I found it difficult to develop an edge. Once I started using level 2, I am finding a big difference. The thing with only reading orders is that you can't see support/resistance from the market makers. I do keep an eye on time and sales, but won't trade simply by seeing a rush of buying/selling. I need to see market makers and ECNs supporting the price action on time and sales.
I don't really have any particular favorites - I trade whatever I can read. Unfortunately, almost every stock is algo driven, but that isn't a problem once you spot patterns in their behavior. Sorry if this doesn't reply doesn't help as much as you had hoped...
amit1986
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As I see it, then, you really have two options:
1) Open a level 2 screen and start watching a couple of moderate-volume stocks. These stocks are less filled with noise and more with trading volume. Make sure the spread is small and it moves smoothly.
2) Find a trader who uses level 2 these days and ask him/her to teach you. This will cost you but could save you a lot of time and money in the future. Mr Charts is one great option and he has a cd of video files showing you just how he uses level 2 and it is much cheaper than doing his course. Just a suggestion.
Markets opening in minutes so this is a quick reply.
1) Open a level 2 screen and start watching a couple of moderate-volume stocks. These stocks are less filled with noise and more with trading volume. Make sure the spread is small and it moves smoothly.
2) Find a trader who uses level 2 these days and ask him/her to teach you. This will cost you but could save you a lot of time and money in the future. Mr Charts is one great option and he has a cd of video files showing you just how he uses level 2 and it is much cheaper than doing his course. Just a suggestion.
Markets opening in minutes so this is a quick reply.
amit1986
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Didn't expect things to be this difficult today. I had lots of stocks on my watchlist prior to market opening and combined with the huge gap up, I had expected some nice moves early in the morning. Instead, I haven't found a single trade yet. There have been some nice moves on some of my stocks, but their ATRs were far too large to justify an entry.
Perhaps there might be something in the afternoon session.
Perhaps there might be something in the afternoon session.
Mr. Charts
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Yes, IF things roll over.
Just seen your kind words earlier
Just seen your kind words earlier
amit1986
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Results within the first half hour:
AMGN: -2 cents per share
JKS: -1 cent per share
CVVT: +17 cents per share
Need to keep the losers small and the profitable trades will work themselves out. I probably closed my CVVT reversal trade too early, but since the spread was large and volume was low, a succession of selling pressure would have dropped the price heavily. Better to just take the profits while they are there.
AMGN: -2 cents per share
JKS: -1 cent per share
CVVT: +17 cents per share
Need to keep the losers small and the profitable trades will work themselves out. I probably closed my CVVT reversal trade too early, but since the spread was large and volume was low, a succession of selling pressure would have dropped the price heavily. Better to just take the profits while they are there.
amit1986
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LH presented several trading opportunities today based on level 2 momentum and chart logic. I will post a chart a little later, explaining my entries and exits and the few nice scalps I took out of it.
For those interested, check out the 5-minute chart and try to find any news related reason for the move.
I'll explain more when the market closes.
For those interested, check out the 5-minute chart and try to find any news related reason for the move.
I'll explain more when the market closes.
amit1986
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LH - Arbitrage?
I spotted LH after it had plunged down quickly. At this point, I was looking for a reversal trade - potentially, a setup that I had described in a previous post. However, upon the upwards break of the hammer-like candle, there was little momentum on level 2 to confirm an entry.
It then continued to plunge down (as were the ES and NQ futures) and consolidated above the 50-cent level. After a small retracement, it continued down but effectively formed a double bottom.
One thing to note is that there was no news explaining why LH was plunging down on heavy volume. So, I presumed it could have been a hedge fund selling their position or another large market player. Given this scenario, I suspected buyers may now come in and try to grab the stock while it's "cheap". As soon as the neckline of the double-bottom was broken and momentum was strong on level 2, I initiated a long position.
Entry: 81.67
Exit: 81.81
Profit: +14 cents per share
Length of trade: 10 minutes
I would have held it for a nice swing trade, however, with the weak market, it could have turned around fast, so I locked in my profits.
My second trade was the break of the consolidation zone. At this point, the futures were heading north and there was strong bid pressure on level 2. I closed my position when I observed a spike in volume.
Entry: 81.95
Exit: 82.10
Profit: +15 cents per share
Length of trade: 13 minutes
Two modest scalps out of a simple pattern on the chart. In summary:
- Stock falls on high volume rapidly
- No fundamental / news-related reason for the fall, suggesting the possibility of an "arbitrage" type trade
- Strong buying pressure on level 2 & time and sales
- classic double bottom setup
- ES futures rallying to new afternoon highs
Each of the above added to the probability of a successful trade, thereby allowing me to get a total 29 cents per share profit. This was quite an enjoyable trade as level 2 was steady and easy to read. The steadiness of level 2 allowed me to maintain control of my emotions and I was able to execute almost-perfect entries and exits.
I spotted LH after it had plunged down quickly. At this point, I was looking for a reversal trade - potentially, a setup that I had described in a previous post. However, upon the upwards break of the hammer-like candle, there was little momentum on level 2 to confirm an entry.
It then continued to plunge down (as were the ES and NQ futures) and consolidated above the 50-cent level. After a small retracement, it continued down but effectively formed a double bottom.
One thing to note is that there was no news explaining why LH was plunging down on heavy volume. So, I presumed it could have been a hedge fund selling their position or another large market player. Given this scenario, I suspected buyers may now come in and try to grab the stock while it's "cheap". As soon as the neckline of the double-bottom was broken and momentum was strong on level 2, I initiated a long position.
Entry: 81.67
Exit: 81.81
Profit: +14 cents per share
Length of trade: 10 minutes
I would have held it for a nice swing trade, however, with the weak market, it could have turned around fast, so I locked in my profits.
My second trade was the break of the consolidation zone. At this point, the futures were heading north and there was strong bid pressure on level 2. I closed my position when I observed a spike in volume.
Entry: 81.95
Exit: 82.10
Profit: +15 cents per share
Length of trade: 13 minutes
Two modest scalps out of a simple pattern on the chart. In summary:
- Stock falls on high volume rapidly
- No fundamental / news-related reason for the fall, suggesting the possibility of an "arbitrage" type trade
- Strong buying pressure on level 2 & time and sales
- classic double bottom setup
- ES futures rallying to new afternoon highs
Each of the above added to the probability of a successful trade, thereby allowing me to get a total 29 cents per share profit. This was quite an enjoyable trade as level 2 was steady and easy to read. The steadiness of level 2 allowed me to maintain control of my emotions and I was able to execute almost-perfect entries and exits.
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Mr. Charts
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Yes, the spread varies from 2c to 8c constantly, though there is certainly some price improvement happening judging by T&S. It's also a bit too prone to sudden shifts to safely trade within the spread.
Richard
Richard
