Breakout Trading using Time and Sales

[amit1986]

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

Agreed. Consolidating heavily at the moment. The recent breakdown could be a trap by the market makers...still keeping an eye on it though on a separate screen...it is setting up as per my previous post regarding consecutive breakdowns with lower volume on each breakdown, although volume alone is not enough to justify entering a position.

 

[amit1986]

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

CISG reversed on exceptionally strong momentum on level 2...I didn't take it

 

[Mr. Charts]

CISG reversed on exceptionally strong momentum on level 2...I didn't take it

Message for you elsewhere, Amit,
R

 

[amit1986]

First trade of the day: BWS. Simple setup of rising candles with higher highs and higher lows, indicating the strong presence of buyers. Clean chart also implying the possibility of getting whipsawed was low.

Entry on the break to new highs at 14.25. Exit when the flurry of buying immediately stopped around the key 50-cent level.

Entry: 14.25
Exit: 14.49
Profit: +24 cents per share
Length of trade: 22 seconds.

 

[amit1986]

Currently long FORR from 34.80....inside bid currently at 34.96

check out the 5-minute chart and see the massive volume and large drop in price...i'm thinking this could be another "arbitrage" type trade...no news for the fall, but managing the trade carefully.

 

[amit1986]

price is rising while futures falling...tells me that there is strong buying pressure in this stock yet...not using opposite end of previous candle as a trailing stop...pure level 2 trade

 

[amit1986]

still in the trade...price at 35.16

 

[amit1986]

position covered at 35.02 for +22 cents per share...moved very quickly when I sold!

 

[amit1986]

Another reversal trade, similar to the previous one. I call these "arbitrage" type trades because judging from volume and price behavior, there seems to be mispricing which can be taken advantage off.

Check out the massive red candle which dropped the price significantly and also the accompanying volume spike. There was no news item I could find that would explain the drop in price. I then looked to take a reversal trade.

One can think of this type of setup as similar to a gap-close setup. A stock gaps up/down for no fundamental reason whatsoever and the smart traders come in to close the gap.

Momentum on level 2 & time and sales was good (although, not perfect) and I took a long at 34.80. Then the stock slowly started to crawl up and I was looking for it to close its "gap" unless I saw selling pressure building. At some point above the $35 whole number, sellers started appearing and as I sold my stock, all the 35.25 bids disappeared and I got filled at 35.02.

Slippage is quite common in low volume stocks as bids/offers move quickly. However, it would have been a better decision to wait it out and let the price continue crawling up, as it is doing now.

Entry: 34.80
Exit: 35.02
Profit: +22 cents per share
Length of trade: 55 minutes

This is the type of trade which could have been moved onto another screen and managed whilst taking other trades.

 

[Mr. Charts]

Nicely done, Amit
Richard

 

[amit1986]

Thank you Richard! I must admit, I do get slippage sometimes, but never got slippage this bad. Quite frustrating to hit the 35.25 bids and get filled at 35.02 lol. But a profitable trade is always nice, so nothing to complain about

Nice going on the CREE trade. I was watching it shoot up and kept saying to myself "Yup, Richard's got a long in this one" and was waiting for you to post your results.

 

[amit1986]

Power of Level 2

To those who say level 2 cannot give anyone an edge, this trade gives evidence to suggest otherwise.

LPNT was spotted off a scanner and after it had plunged down roughly 5%. Watching level 2, I could see a particular market maker who was controlling the price (historically, this market maker would be known as the AXE). I could see him wanting to drop the price.

At one point, this market maker's behavior changed and I went long at 34.14. Price chopped around for a while and I had my mental stop at 34.04, where I could see support on level 2. The stock then shot up, forcing shorts to cover along with bringing in more buyers.

I exited at 34.41 where I could see selling pressure building. I admit it was a pre-mature exit and I should have instigated a trailing stop.

What sort of trailing stops would have worked well?

1) Opposite end of the previous candle as suggested by Mr. Charts.
2) Penetration of the EMA(10). By observing the chart, the EMA(10) was acting as resistance during the fall, but then became support.

Both of these methods would have yielded greater profits.

Entry on the crosshairs; exit as detailed on chart. See broker screenshot for more information regarding extry/exit.

Entry: 34.14
Exit: 34.41
Profit: +27 cents per share
Length of trade: 25 minutes

 

[amit1986]

Another reversal trade today, but this one included the use of the daily chart.

LFT plunged down almost 7% today, but started to bounce off its 200-period moving average (check attached daily chart). This area of support was also confirmed by a previous pivot low as highlighted on the chart.

On the intraday 5-minute chart, LFT formed a double-bottom. Furthermore, I could see strong support on level 2 at 35.72. As soon as this support was confirmed, I went long at 35.88 whilst having a mental stop at 35.70.

Exit came when it neared the whole number and sellers started appearing on level 2/t&s.

Entry: 35.88
Exit: 36.69
Profit: +81 cents per share
Length of trade: 1 hour

 

[amit1986]

Got a nice quick 16 cent scalp out of STT. Similar setup to Mr. Charts' trend trade.

That's the only trade so far - you really have to be careful and pick your opportunities carefully. High probability setups = best chance of success.

 

[amit1986]

Extremely boring and choppy...no opportunities. LNCE could reverse though, so keeping an eye on it. Nothing else yet.

 

[amit1986]

Forget LNCE - chopping around too much with very little readability on level 2.

 

[amit1986]

Pure scalping day today based only on level 2 and some chart trades - took many, many small gains of about 3-20 cents per share. Afternoon presented lots of opportunities.

Had a careless software problem early in the morning which cost me 20 cents per share, but I was able to make it all back throughout the day.

It's quite possible to make a living out of trading. Not only is a positive expectancy strategy required, but also the ability to remain emotionally in control and an extreme sense of discipline.

 

[amit1986]

Got two nice trades out of AMT. First breakdown trade based on Mr. Charts' setup gave me a quick 7 cents per share profit. Then, when I saw strong buying pressure on level 2, I took 16 cents per share profit on a reversal.

Nice easy slow moving stock which allows me to maintain logical thinking during a trade.

 

[amit1986]

I'm thinking this could be another scalping day as the overall market is quite choppy, but you never know

 

[DionysusToast]

Good stuff Amit... Keep it up.