buying at bid,selling at ask..

[mr pastorius]

...first off cool forum,looking forward to getting involved.

ok,so im just about to kick off my trading career?!,trading the YM.so ive paper traded everyday for the last 4 months,4 hours a day.ive allowed for commission and a 2 point loss for the spread on every contact.im well aware these electronic simulators make it fair easier than it is.

my point is every bit of advice ive read so far says when you first start trading to buy/sell at market...this if im correct will cost 1 point both sides of the transaction if the spread is 1 point.so my trading style is to trade what i see and take only what the market allows which means sometimes in for a matter of seconds.the other tactic i use is to get in and out before the crowd .about twice a day i get strong signals from my indicators allowing me to get in real early on a trade,these give about an 80% success ratio.id say im inat least 2-3 minutes before the crowd.
what id like to know that at these times can i take advantage of buy at bid etc, if i see the move early.and for that matter when can i in general use this tactic without missing the move for the extra point.and how do i apply it.

all replies appreciated

 

[adrianallen99]

If you know something is about to move you are better to buy at market, if you use a limit order to try and get in at the bid you might miss the action all together or worse still catch it on its way down.

How do you know at least 2-3 mins before the crowd, Dont you think the Market Makers and specialist will also know before the crowd. If so, you may get badly burned with this tactic

ofc I could be wrong.

 

[BBB]

I'm no spread monkey, but a limit order may give you some degree of success.

e.g. If the quote is 101 bid - 103 offer, and you want to buy for 101, enter a 101 limit order.

Look at the previous posts of Naz, Trader333 and Twalker. They know more about this than moi.

 

[TWI]

How much are you trying to take out of a typical trade and is the Bid/Offer spread significant?
Are you looking to buy bid and sell offer or viceversa?
Are your costs low enough to make this viable?

If yes then sit on bid or offer when you get signal, if you miss some, so what.
If you miss too many and you always look for a few points min then change and go to market instead and see if you start to do better.

 

[One Eyed Shark]

Mr. P.

I only trade YM and use IB,

It is possible to place limit orders 1/2/3 points below/above the market price and get filled straight away

Though if you are looking to get in ahead of the crowd is 1 point either side going to make or break the trade ?

Interested in your strategy if you want to talk further PM me.

 

[mr pastorius]

...thanks for the replies guys.....when i say in before the crowd ....i guess confidence in my signals sometimes means i need less initial price movement to convince me to enter.this is probably easier to achieve on the YM, im guessing there isn't the liquidity for the market markers etc.i look at lack of liquidity as having an advantage also as it doesn't attract the big boys.

although the extra point doesn't matter if you're trading 3-4 moves a day,the style ive developed will be more like 15 positions a day .this over time will make a huge difference.im guessing that i get in a move in the first 10% of traders...you can see how when the move becomes more apparent how the YM overacts and surpasses the INDU movement quickly.i try to call the move before this and hence trying to see if with the earliness of entry can be rewarded with an extra point here and there but certainly dont want to miss the move completely.anymore opinions guys.

ps is there any basic ideas which i can apply when using DOM which could give me an idea of when this strategy would be most successful,or is this just learn as you go along stuff.

 

[nyctrader]

Generally, to buy at the bid & sell at the ask you will need a direct access broker like with the routes ARCA , ISLD, BRUT, or INCA.
The best one to get filled with is ARCA (IMO). Then all you have to do is place a limit order (at the bid/ask) to that route, which you will see appear in the market in your Level II screen. Then when someone hits your order you have saved yourself the spread. It's a good idea to try and take advantage of the spread whenever possible. Generally you save yourself at least .01 on each side of the trade, that's $20 difference on a 1000 share buy & sell order. That can really add up, especially when you are making multiple trades each day.

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