Hi Pollux,
Here is a little more thinking about that above SOHU trade and how homework can work.
It started when i saw that AMZN,YHOO,EBAY etc had been doing so well.So i hunted for smaller internet stocks that had maybe been running better.(ie i'm looking for better volatility)Then when i found one i searched for news on it and found others associated with it.
So then i made a folder in tc 2000 and put them all in there.At some stage i reckon they will be tradeable.I also checked them out on a level 2 screen and made sure that when the time came the liquidity will be there.
Then i went through all my folders in the morning and bingo that section had all sold off.So i went searching for the story.Once i found it i thought ok at some stage there will be a level that will be important.I found that level with SOHU it was $30.20.Fantastic, a fib level just above a decade number.
I checked the stock pre market and it had gapped down into that region.Great now i've got a gap down into a key support area.Throw away your charts now they've done their job,why do i want to look at them on the open they've given me all the info i need.Now i'm going for a gap play with key support underneath me.
When the players set themselves up on the level 2 screen to make their move i'm in.I'm sorry no oscillator,moving average or anything else will tell you,just the players,its they that change the prices.Once they've changed the prices and someone transacts against that change then the chart will register it.That for me is to slow.
I look to grab a 1,000 off the ask and in such away that that it creates even more momentum to the up side.Remember this is chess,i use my entry to create momentum by taking out ecn's that might be in the way.This is where hot key'd orders work so well.
Once the run starts in a volatile stock it can close the gap and keep on running as all the late players with their slower means of viewing the action and trade executions join in.
My reckoning is always once you've banked over a dollar run and you're up near a whole number start thinking about getting out or scaling out.After all in 15 mins you've just earned a days money with 1000 shares thats $1000,not bad for 15 mins work,dont let it go.Remember as well i'm watching the liquidity of the stock on the level 2 screen so when i'm ready to go i know how i will exit.Remember also you cant exit a 1000 shares into fresh air,there has to be someone to transact against.You can see who you can transact against on the level 2 screen.If someone pops up with a 1000 on the bid or below the bid at an opportune moment hit him and be gone.
Ok that part was over and the next part of the plan was that $30.20 level.Would it re test? i had no idea,but i just watched an waited.In the end it did come back and i sat and watched all the action as it trundled along.No chart was needed,its done its job already by giving me that key point.The only action was on the level 2 screen.After a time you get to see how its generally being played.then all of a sudden they set themselves up for a break,hey presto i'm in,now its was just a question of managing the trade until i got stopped out.
Did i think it was going to break? In all honesty i didn't have a clue but i knew some guys that did and i just watched them on the level 2 screen until they gave me the signal and then took a low risk trade and managed it to see how much it would give me.
Remember for me the key was picking a good volatile stock so that when it moved it would give me extensive profits.T/a finds set ups.After that its Nasdaq level 2,that shows where the story is,thats where you'll be ahead of the action and not behind it!
