Trading Nasdaq stocks with spread betting.I've never laughed so much.

[Naz]

A couple of weeks ago i was talking on the phone to some Nasdaq traders in New York and explaining to them how some people in this country traded their market by spread betting individual Nasdaq stocks.At first they were stunned,then they said "hey man youre joking" before laughing their heads off.

Now i'm sorry for the start of this thread but it just reflects my view on the subject.However i would seriously like to understand why people continue using this service on Nasdaq stocks when it is so biased against them.

Forget the $25,000 opening limit for trading the Naz because there are now ways round this.Forget sending money to the states because you can trade level 2 in this country with a sterling account.Forget about not paying capital gains tax because every time you take a spread bet you are paying for the companies overheads,UK taxes and company profits.You pay over the odds EVERY time you trade i only pay capital gains tax on my profits.

I understand that in some instances it can be handy to spread bet.But on Nasdaq stocks,when youve got level 2 direct access and the oppertunity every time to take a trade with out paying any spread at all.Why are there people who want to trade it any other way?

Another thread was talking about trading stocks in different time frames and getting in when the OB/OS indicators in each time frame lined up together.I've done this on Nasdaq stocks and it works very well,but the trouble is that there is such a big window of decision about exactly when to get in.Compound this by getting stitched up on the spread betting quote and you've got real problems.

If you take this style of trading and add the benefit of using Nasdaq level 2 direct access you can get some realy good moves.Your indicators alert you to a potential move,the reading of the level 2 screen pin points that exact time to get a great entry and being able to save the spread using direct access puts you in a potential winning position the very instant the trade is taken.

I expect that of course that i'm talking a load of rubbish and that spread betting Nasdaq stocks is the way forward so please let me know because at the moment i just cant see it.

 

[Grey]

Not correct

Quote "and it works very well,but the trouble is that there is such a big window of decision about exactly when to get in "

Quote above is not correct NAZ. You can get in within a single points in and out depending on your oscillator. Please see my set up in my lecture. An AUto regresed CCIMA gets you in within a single point.
Spread betting is a Joke. Correct

iraj

 

[TraderPattern]

Chalk and Cheese

Quote "and it works very well,but the trouble is that there is such a big window of decision about exactly when to get in "

Quote above is not correct NAZ. You can get in within a single points in and out depending on your oscillator. Please see my set up in my lecture. An AUto regresed CCIMA gets you in within a single point.
Spread betting is a Joke. Correct

iraj

Grey,

This is a chalk and cheese discussion. Naz is talking about making money, not theorizing on the efficacy (or otherwise) of econometric modeling. Naz - with his Level2, discretion and controlled emotions - will beat a statistical approach hands down. An autoregressed CCIMA will not be able to dynamically assess the unfolding story of market maker bids/offers, ECNS, and orderflow(all on Level2) ... the econometric approach is simply based on the historical price behaviour, and will miss the second by second market participant interaction on Level2. The econometric approach will fail to differentiate between statistically equivalent entry points ... but, with an understanding of Level2, there may be a world of difference in the attractiveness of statistically equivalent entry points.

Just my 2 cents (as a member of the world of profitable 'keep it simple stupid' - KISS- trading)

TraderPattern

 

[Grey]

Traderpattern

Quote : This is a chalk and cheese discussion. Naz is talking about making money, not theorizing on the efficacy (or otherwise) of econometric modeling...


I too am talking about money and not some silly absruct stuff to impress.

Quote:- An autoregressed CCIMA will not be able to compare the unfolding story of market maker bids/offers, ECNS, and orderflow(all on Level2) ...

Technical analysis's objective is not to UNFOLD STORY OF BID.OFFER, ECNS and ORDER FLOW. That is the task of L2 player. A technicican detects trend based on historical behaviour of the stocks.
I really appreciate to meet you in the T2W chatroom and see your trades in real time and its edge over technical analysis.

I have nothing against a L2 player at all, but at he same time beleive in the correlation between past and future and more than any thing else if it CAN PERFORM OR NOT...


Quote " the econometric approach is simply based on the historical price behaviour, and will miss the second by second market participant interaction on Level2..


Correct but a historical based approach can catch big trends using multi time frame analysis......

Please lets trade in the chatroom and leave the theory behind?
I will be in the room on Tuesday @ 2.00

Grey

 

[TraderPattern]

Re: Traderpattern

Quote : This is a chalk and cheese discussion. Naz is talking about making money, not theorizing on the efficacy (or otherwise) of econometric modeling...


I too am talking about money and not some silly absruct stuff to impress.

Quote:- An autoregressed CCIMA will not be able to compare the unfolding story of market maker bids/offers, ECNS, and orderflow(all on Level2) ...

Technical analysis's objective is not to UNFOLD STORY OF BID.OFFER, ECNS and ORDER FLOW. That is the task of L2 player. A technicican detects trend based on historical behaviour of the stocks.
I really appreciate to meet you in the T2W chatroom and see your trades in real time and its edge over technical analysis.

I have nothing against a L2 player at all, but at he same time beleive in the correlation between past and future and more than any thing else if it CAN PERFORM OR NOT...


Quote " the econometric approach is simply based on the historical price behaviour, and will miss the second by second market participant interaction on Level2..


Correct but a historical based approach can catch big trends using multi time frame analysis......

Please lets trade in the chatroom and leave the theory behind?
I will be in the room on Tuesday @ 2.00

Grey

I think basic technical analysis (i.e. a chart) has a place alongside level2 for intraday trading. However, I am not too sure about overcomplicating things with econometrics (e.g. autoregressed CCIMAs). When it comes to trading, I leave econometrics (of which I have several years of experience with) at the door of academia. The school of hard knocks has taught me that profitability and simplicity go hand in hand (at least for me). But if you are making money with statistical models, I say good luck to ya ... its just that I don't think I can.

 

[Grey]

Tuesday

Can't make it on Tuesday but Wednesday is OK . Sorry about the change,she dictated it.

CCIMA is a simple CCI smoothed... This on IRD is a one line instruction. What makes the difference is trading the market using various time spans.. A very simple concept and vital to my trading.

L2 and TA can work hand in hand for effectiveness however the information over load could easily take the edge away...

By the way.. The EXCEL MACRO GOES OUT ON TUESDAY and will be posted here as an attachement.

 

[Naz]

When i started the thread i thought it might create interest from the spread betters amongst us.So i'm pleased that Grey started off by saying spread betting is a joke.I didnt think my remarks on entering a trade using t/a indicators would be the item that would stir up interest.

I'm thank full that Trader pattern argued a case for us Naz L2 traders whilst i was away from the board.But now i'll try and be objective and put my points.

We all believe passonately in our own form of trading,and i think as Grey said L2 and TA can work hand in hand.I dont need to repeat anything of Trader Patterns said because i've always agreed with everything he's ever said on this board.

It always astonish's me why my people seem to knock something like L2 that works so well when the best plan is maybe to use them together as grey suggested.

I remember a very good friend of mine, passionate about t/a.We put him next to a Nasdaq level 2 trader in the city with all his graphs and said to him "You trade your graphs/indicators and when your going to take the trade live call it"

So he said "the indicators are just getting ready to give me an entry signal and i'll be getting in almost immediately".He then said "sorry false alarm as you were"the level 2 trader turned round and said "what are you talking about i just made $250 on that move!

He told me later he was astonished! But he said "i saw with my own eyes how the L2 trader made seemingly profits out of thin air".He still looks at graphs but when it comes down to entries and understanding the immediate action in a stock everything is done with Nasdaq level 2 direct access.

(and yes Colin i know you look at my posts and if this weren't a true story you would be letting every one know)

 

[neil]

spread betting

I've said elsewhere that now I've used spread betting (and still do for commodities on penny stakes at Finspreads) I have noticed how spreads surge forward past the eight or five point advertised spreads necessitating a larger required move to make a profit.

Sometimes, in practical terms, you can be looking at a twenty point spread.

Now researching CFD's and the new Universal Stock futures at LIFFE. Elsewhere I've invited opinions or comments on these two instruments and repeat same here. Comments please, especially if you have used them?

As for TA, I use it for short term trading but along the lines of simplicity (Moving averages, bollinger bands to spot consolidations, and macd). Some of my favourite books are by Murphy and Stan Weinstein, even Nicholas Darvas.

Seems that US markets offer biggest choice for volatile shares should one wish to trade intra-day or short term etc. The tools of the trade seem to emanate or be dominated by US companies.

As a relative newcomer I am still learning, hence my planned move away from spread betting. However, I feel that level two and TA suit different people and there is no reason they both cannot be used ( daily trading and short term trading together)
My inclination is towards short term (several days) trading since I found myself confused and lost when trying intra-day trades.

The comment elsewhere that several time spans should be looked at is very true when seeking the dominant trend. Stop loss is another must have tool.

The above is only my observations. If you disagree then let me know since constructive criticism is a great educator.

Regards
neil