Market chat

[BeM]

Let me enter the discussion, may I...
All participants in the market help create the market. If there were not short-sellers for example some would think that it would be much better because we wouldn't have had the crashes and the economic depressions that usually follow them, and everyone suffers etc. But just think if there were no short-sellers! When everyone had bought and there was no buyer left and let's say some specific price was at 100, because there wouldn't be any buyer left no-one could sell anything to anybody and the market would simply freeze, and a dynamic and prosperous economy needs continuous money circulation in order to survive. So... when there is no buyer left and the price is at 100 the incentive for the market to move comes from those who sell short. When they sell short the price falls from 100 to 90 for example. When it falls to 90 people get scared and don't buy anymore, so the market can be frozen again because there will be so many sellers, out of panic, and no buyer. Here the short-sellers are useful again where they cover their shorts and the price can rise a little bit and other people start to follow, out of greed, and this circle continues. So traders are the essential part of the market, not exactly as I mentioned but that would be the simplistic situation The same thing is about daytraders, scalpers and so on, although I believe that cempetition dictates everything, if there are too many people using the same technique successfully then there will be little money in it

 

[options]

Came across this the other day on the web.
It's another guy pumping a trading system that will make you rich 'cause he will tell you how he does it as long as you cough up x amount and follow what he does. (Where have I heard that before.)

Any comments anyone?


Regards.

Options.







"The Real Use Of Level II



Important Review:

Do not use Level II when choosing an entry price. In other words, WHEN to buy.

Use Level II to your advantage, use Level II for order routing. In other words, to WHOM to buy or sell.

Level II is constantly used by market makers (and now individual traders)

to "head fake" and hide their true intentions. You can easily be trapped into a wrong decision by using their Level II bid and ask display.



Using Level II properly is a must for successful day trading.





The incorrect usage: to watch the bid/ask display at each price level for support or resistance and then use that Level II support and resistance to assist you in making a decision on when to buy or sell a position?



I can't tell you enough how INCORRECT this is.



For example, a trader is ready to open a long (buy) position. He or she goes to their level II display and notices GSCO (Goldman Sachs) , MSCO (Morgan Stanley), MLCO (Merrill Lynch) all on the inside bid with say 8 or 9 other participants, with large size.



The trader thinks "ok I've got support (many offers to buy), and the ax (another term thrown around the internet) on my side, this is a good time to BUY (when)."



They receive their buy confirmation and a few seconds later the stock starts to fall. All the big boys have left the bid (buy) and are now on the ask (sell). The stock is dropping fast and the trader feels panic taking over. They wonder how this could happen with all the bid support they had upon entering their position. Well, they've just been had. Welcome to loser day trading.



Most of what you see in Level II is about "head faking" and hiding true intentions. In fact, it's the market makers job to cover their intentions (buying/selling) and to cause price movement in their favor for themselves and their clients. They use Level II for this purpose. That's their business. If a market maker has an order to buy 500,000 shares, they're not going to sit on the bid all day. The whole world would see this and bid the price up, knowing that the market maker would be a buyer.



Instead, they'll play the game. Go on the bid with large size to push the price up a little, maybe even up tick (move their bid up one level) to push the price a little higher. All the while they're using an ECN, for example INCA, to sell short the shares the unsuspecting trader is buying (thanks Mr. ax). Then they move to the sell (ask) side with large size to cause a mini panic.



In this case, the market maker or makers were showing a false bid on Level II. Instead of wanting to buy the stock they really wanted to sell the stock, which they were doing through INCA.



As the panic heightens and the stock drops, the market maker will buy back the shares they just sold you at a higher price pocketing the difference (this is called selling short).



You will not see them buying back the stock because they will be buying through an ECN. Very effective, and designed to profit off of traders that look for support and resistance on the Level II screen.



Level II should be used for ORDER ROUTING. Routing is the ability to choose which market maker or ECN you wish to buy from or sell to. Never use Level II as a tool to decide WHEN to enter. Instead, use it as a tool to decide TO WHOM you wish to enter with.



Let the market makers play their games, pay no attention,. If our price movement charts say GO, we'll use the market makers for OUR advantage, not theirs.



Big institutions and market makers trade off of price movement, not the Level II screen, so why should you?



In my "Insider Day Trading Secrets, Tips and Strategies Program" I'll teach you the exact secrets the market makers use. You'll learn how and when to take money out of the market using their secrets. Then go ahead and apply those secrets on the herd of unsuspecting online traders.



You'll also learn everything you need to know about charts...when, where, how. Plus loads of other secrets, tips and strategies.



Don't be an unsuspecting online trader. Click YES to learn how to take money out of the stock market.



YES "

 

[Skimbleshanks]

I know where that's from - Bill also boasts that he's got 'killer strategies'. Perhaps he means he can kill a healthy portfolio stone dead by using his trading strategies.

 

[options]

Lol, you're right Skim. We must both use the same search engine.
I was just trying to find out a bit more about the L2 screen and how to use it, (properly).

Options.

 

[boy]

who is it?

 

[Miki]

‘The Real Use Of Level II’

Although my opinion of LII reflects this sentiment 100% (sorry Naz) - beware of snake oil vendors!

 

[Naz]

No offence taken Miki.

OH (sigh) I can see all different points of view.I can see how this chap is selling his tips and strategies and how others might seem sceptical and of course i know exactly what happens on the level 2 Nasdaq screen.

His write up is designed to get people interested but at the same time it can put others off.His insinuation that there are fakes all over the level 2 screen might make some think "i need to know these secrets" but others think with all that happening i dont think i want to know.Let me have my charts and i'll be happy.

All i say is this.How many people who REALY know and use Nasdaq level 2 direct access have complained on this board that it dosnt help them trade with an advantage?Not learners,traders that use it day in day out.Then ask how many people have complained about spread betting.

"Using level 2 is a must for successful day trading" If you trade the Nasdaq this quote he gives is absolutely true.It dosnt matter what style you use during the day it just gives you a fantastic edge.By all means use charts as well,but think what a difference it would be to your trading if you had that extra window on the market that showed you what was REALY happening.

As an example i attach a chart of ADBE,breaking down through the whole number.I NEED A LEVEL 2 NASDAQ SCREEN and direct access to see and trade the bounce,many might have gone short.

During my intermediate learning process, i found one of the best traders on the West coast,with no appointment i jumped on a plane turned up at his trading desk and said "talk to me" He could have said "get lost" and the trip would have been in vain.But i reckoned the risk/ reward was worth the trip and so its turned out to be.Be brave in this world take your trading to another dimension.Forget the hype of level 2 and the doomsters just think inside yourself, how much that extra information would stop you making costly mistakes and help you jump on the winners before others can see whats happening.On a market where stocks TRULY move,giving the short term trader such great OPPORTUNITIES.
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Of course this is only a personal opinion and trading any market can result in loosing all or part of your capital.

 

[bigblue]

Anyone know where I can get access to very long term (100 yrs +) histoical data ?
Thanks

 

[BeM]

Hi Naz,
I daytraded the S&P spreadbetting for about more than a month actively. You can imagine that it is not realistic to have a very short time approach in spread-betting. So I used to choose a longer time frame, which was at least more than half an hour. However when I lost I lost much more than when I gained. So I decided to learn more and gain skill in a longer term of trading, specially futures. I started to think in days or even weeks. But I haven't traded yet. Sometimes it's much better just to sit and watch and I've learnt this
Daytrading means (as professionally understood) trading many many times, maybe hundreds, during the day. However doing so means you are going to pay many spreads and commissions and also you ought to get out having made very small gains in order to avoid losing and I understand these approaches pretty well. I understand that it depends on personal skill to be able to trade better than others and also a lot of discipline. Gains are more than losses, trades are very often and they are with small returns. Commissions and spreads are a great portion of the business.
So please tell me what is a realistic return on the financial investment, the capital, put forward for daytrading? What could be a realistic capital to start with, in order to offset the commissions becoming greater than the return?
I asked these because of simple curiosity, not that I would think of doing it. I believe it doesn't fit me. I prefer trading with a longer term vision. Well, I still need training
Thanks

 

[dsmodi]

you should be able to get 100 + yrs eod data on e.g. the DOW from www.prophetfinance.com

As always, great post naz...

 

[Mr. Charts]

Expectations? I know the question is directed as Naz, but since it's an open forum.....
These refer to US intra-day trading:
Active day trading for a beginner, after paper trading, .7% to .9% average per day. This is ungeared and minimum of $7500 capital.
Experienced day trading using level two, live scanning software etc 1% to 1.5% average per day on $25-30000 capital.

 

[Naz]

Thanks dsmodi.

BeM,A nice post.Here we go.

Daytrading in my opinion is any trade where you enter and exit during the day.From someone who traded 200 round trips a day (known as scalping) who says i cant still use the same skills and take two or more round trips a day? for longer movements.

When stocks were $150 plus it was possible to trade many times a day and the only way in this world to make that work was with a Nasdaq level 2 direct access screen.As options post says "Using level 2 is amust for successful day trading".

Ok with stocks so cheap now, trading 200 times a day imho is a waste of time as you say.But wait a minute if you got the arguably the most open and fastest direct access platform in the world isn't it possible to take it and use these level 2 scalping skills to sit watch and wait,then pounce like a lion and use the level 2 screen to manage the trade for those bigger moves? that is where big profits are to be had.

Level 2 is a story that unfolds.watching its action alerts you to who the real players are and as you watch their movements around the screen you're ready to pounce when they give the signal that were going for a run.Any false move and you've got the tools to scalp a quick profit and wait for another entry.

Trader Pattern and myself have been talking about this for over a year,we're still here,still doing it.My last live trade in the thread for beginners called stop loss,looked after by Helenq made $1200.I used a Nasdaq level 2 screen and closed half my position at exactly the low of the day.(a scalpers exit).Costs were $28.

On a daytrading account you get 4/1 margin.Most ex scalpers i believe are now trying to shoot for a total of 50c -$2 in moves/ day.As a novice you might start with 200 shares and look for $100-$400.Moving on to 1000shares which is easy enough to handle on the screen and $500-$2000 moves.Playing larger size you might try MSFT or QQQ's for the liquidity.But however you trade and however many times a day you do it you will do yourself a disservice if you don't understand how to take the trade with level 2 direct access.

When people who see it say"amazing" "unbelievable" "awesome" isnt it time to for traders to check it out? When i started trading i wanted an edge i always felt i was being taken advantaged of by brokers and market makers,something i just couldnt do anything about..................Until i went to the US and screamed YES! YES! thats it.Now i can trade like i realy want to.

Many can trade in the dark ages but for those that know different there is Nasdaq level 2 direct access.
-------------------------------------------------------

This is only a personal opinion and any trading can result in loosing all or some of ones capital.

 

[BeM]

Thanks Naz

 

[BeM]

bigblue,
This is exactly like prophet.net which RogeM had posted before... I think But it doesn't go beyound 1915

 

[Naz]

One of the things i'm hearing now is that companies are starting to look at ways of getting around that $25k Nasdaq trading regulation.One of the latest ideas that is now in operation is this.

The XXXX Group is a corporation that allows traders like yourself to trade with in its account. This account is well funded and its balance surpasses well above $25,000 which makes the account funds eligible to be traded without restriction. Group members open a sub account within the umbrella of the XXXX Group allowing the individual member to qualify for the same benefits as the XXXX Group account

I wouldnt like to comment on it at all,but it seems that the barriers are coming down and schemes are being put in place to open it up for everyone again.Next year could be one giant opertunity for Nasdaq traders and once one corporation starts it many more will no doubt follow.

 

[Naz]

BeM Here is the trade i'm in now.the blue arrow was the entry and the red line is my stop.nothing manic,nice and gentle but i'm just managing everything on the level 2 screen.

update.Still in the position.I'm going for a break.I'll be lazy and put my outo stop on and if i get taken out the trade will make about 40c and therefore $400.

final update.The auto stop took me out with with about $400 profit.Length of trade 1 hour 20mins.Thats what i call a slow un pressurised level 2 daytrade.You see you dont have to be a manic scalper to daytrade the Nasdaq with level 2.

 

[BeM]

Naz,
I read the "reminiscences of a stock operator" and I thought I understood it perfectly. Then I traded using SB and gained and lost but my gains were far greater than my losses because of the bias Well... that's life, nothing is easy.
I went back to the book and read it again and the following phrase struck me although it didn't seem realistic to me before: "the big money is in the longer term trading... or the big picture" I'm sure I'll go back to the book and understand other phrases later on as well. But I'm sure you would agree that it requires skills to both scalp or trade in longer timeframe, but the big money is in being more patient, taking more risk and studying more which is very little possible daytrading.
The great problems with daytrading are that first: you don't have time to study the charts and every other factors that are priced or not yet priced in the chart; second: many commissions, many spreads, and probably many other costs like live data, live news etc.
However many people do daytrade and make good money.
This is just my personal perception

Now I guess Mr. Charts will intervene saying how many percentages "on average" one can make and how he teaches everyone and how he makes his and his family's living. I am happy for you Mr. Charts. I was just thinking if one could make something like.7% per day they could be making fortunes in a few months and we would be seeing people building palaces all over.

 

[dsmodi]

Naz,

I hope to do Level 2 trading one of these days (funds!) - primarily because of the pro-L2 posts I've seen here.... However, there must be a downside as well - there has to be. Can you mention what that is.

And also, how many L2 traders you know have a knack for it? As opposed to those that educated themselves for it.... (I hope thats clear). Can just anyone do it once they have been shown "how to do it"?

Thanks in advance...

 

[Helenqu]

Hi BeM,

You sound like I did about a year ago. I'd hear people say "I've made 300% this year" and think "Oh yeah? Show me the bank statements". But just from my very brief time trading futures I can see how that is possible if you are a good and consistent trader (I make no claim to be one yet, but I'm working on it )

The longer term trends are seductive but trading them also means you have to be ready to accept much bigger drawdowns. I for one don't have the capital to trade like that. I'd very soon get wiped out and I want to survive long enough to learn the job properly

Just as a % example for STOXX futures, if you have a £5K account, you need to make just 4 points a trading day to increase that account by 10% a month. Now I don't think that's bad at all. Ok you can't live on it. But once you can afford to trade 2 contracts at the same risk level then it all becomes a lot more realistic in terms of money earned.

Not sure if that answered anything at all but my 2p

 

[Naz]

I believe that one has to look at different time frames and then think i've got this position.Maybe if it looks bad at the entry i'll scalp it.Then its runs on a bit and you say now i'll swing it a bit and all the time you manage it thinking what time frame am i looking at now,where should that stop realy be.But the key for me is managing it.Sometimes you manage it well and it realy runs for you other time it takes you out and then carries on going.but all the time you just bank what you've made and move on to the next trade.For me its how many dollar and cent runs i've had during the day that counts.