Market chat

[Naz]

If whole numbers can be interesting areas of support and resistance on Nasdaq stocks then these can be very good places for day traders and swing traders to take their trades.
Once a trader has identified a stock through which ever means he uses.Then the time comes to trade it.

Nasdaq stocks can be very volatile and therefore give many more oppertunities for profit than other slower markets.Because of this volatility it is sensible to understand, arguably the best way to trade Nasdaq stocks.This is with the Nasdaq level 2 direct access screen.Indeed even internet brokerages like Ameritrade who offer basic internet trading offer the trader the ability to watch the trading on the level 2 screen even though they route the order for the customer.

This now is where some traders disagree.I believe that once you've identified your stock you dont need any t/a,directors buying details,fundamentals or any other info.All you need to do is give 100% concentration to your level 2 direct access screen.With practice you should be able to see exactly when the stock is going to turn.Direct access gives you many orders and ways to pounce like a panther and take your trade in the blink of an eye when you see your prey faltering.Once in the trade you can use the same skills as the market maker in managing your stock with tight stop losses.You are now using your trading skills and playing live trading chess with the players on the screen.The more practice you have the better you get.15c stops with $1 runs mean that you can get 6/1 risk / reward on your trades,these are scalpers entries that allow you to manage your trades a lot easier than someone who has to have 50c stops, arrives late for the party because he waited for the stochastics to turn up and took his trade with an internet broker.

If you trade Nasdaq stocks it would be wise to understand that this way of trading exists.For many it enhances their profits,for others its not for them, but whatever group your in, it surely is one heck of an eye opener that takes your breath away.It also makes you realise just how far behind we are in our trading platforms here in the UK.

 

[Naz]

Level 2 direct access,thats to fast and furious for me, i hear you say.I only trade 2 or 3 times a week.

Well lets consider our old friend Intel (INTC) mentioned earlier in the thread.The weekly intraday chart which is shown below.Look how it holds that decade number of $30.I see that over a period of just over a week you could have used level 2 direct access skills and 15c stops to have bought Intel 3 times at $30 and run it to $31.1000 shares in such a liquid stock would have made you $3000 in just over the week.

Each time it fell to $30 you would had the confidence to look at your level 2 screen and seen the big market makers coming in and soaking up the stock.Even when it briefly dipped underneath by 10c you still would have seen them buying like crazy.Taking your trade at this level you would see players 15c/20c away who you could have executed against for your stop and you could have watched them like a hawk ready pounce on them if you needed to.Safe in the knowledge that direct access would have allowed you to execute your trade immediately whilst more unlucky traders were just contacting their brokers.

Also interestingly enough watching Intel for the last week arguably told you the real picture of the semi conductor sector.But then Intel is the tier 1 general.

 

[tjbw]

Looks like INTC had another one of those days:

INTC low 30.029 high 31.45

Some other semis did well incl.

PMCS low 16.31 high 17.85 gain 9.4%

AMCC low 8.08 high 8.89 gain 10%

Barry .......... .

 

[Naz]

If anybody is interested there is a free trading seminar at the Radisson Edwardian Hotel,140 Bath Rd,Heathrow.at 10 am this Sat.Details are on www.Glomtc.com

Sponsored by Global Markets training,GNI,finspreads,Sharescope,Trader pc,and Shares magazine.

It will cover introductions by various speakers about spread betting,t/a,CFD's,Futures and Nasdaq level 2 trading.I've been asked to talk about the Nasdaq section, if anyone is there from t2w feel free to come over for a chat.

Naz

 

[Naz]

One month ago when most people were bullish this thread posted an island reversal on the Nasdaq and as this is mainly a t/a site i should imagine that most people should have understood the next move was down.Every other index then followed the Nasdaq and we've had a nice time being short.

I still find it rather confusing that an equity market which is a world leader,follows t/a extremely well,has the best trading platform in the world and has such extreme volatility is not more widely traded here in the UK.

Ah! i hear you say we follow the Dow.Well think about this.If the Dow rose 15% it would be at its all time high.For the Nasdaq to get to its all time high it would have to triple.Ive always understood that to make money one needs to trade a market that moves strongly,either up or down.I would therefore suggest that the Nasdaq is an ideal candidate.(i enclose the latest Nasdaq chart and the red line shows where this thread posted the island reversal chart.)

 

[ChartMan]

It's a simple case of maths. Very simly we pay a 10 point spread on a round trip on the dow ( at say 10,000). We pay the same spread of 10 per round trip on the Nas ( at say 2000).
So lets go for a 100 point rise at £1 pound a point (1%).
On the dow we make £90
lets go for 1% on the nas. We make £10
The nas has a factor of 3x greater volatility so we make £30.
I'll stick with the DOW....
Or is my maths that bad?
Perhaps if we had direct to market trading on the DOW and NAS, then I may be inclined to agree......until then.....

 

[ihickling]

Just a question - does position sizing need to be added to the equation.

My maths is not up to calculating impact of this, or even knowing if it is a factor, depending on trading style and system.

A move against you of say 5% of the average daily volatility for the Dow would be a higher risk than on the Nasdaq.

Whats your opinion.

 

[ChartMan]

A 5% move against you is a 5% move.....irrespective of what you are trading. Trading the dow, 20 points against you day trading/scalping is about as far down as I would be prepared to go. The bottom line is one is looking to win a certain amount of points, multiplied by the stake, to fit in with your trading style and overall risk management plan. The permutations are endless when the main plan is to make, say £100-£200 per day.
Say 10 trades a day, 6 wins 4 losers, average 20 points won/lost ( on dow, not unreasonable). Therefore you need to bet £5 per point to achive your £200 per day profit. This would equate to a capital minimum of around $2,500. But this puts the whole of your capital at risk. Assume a risk factor of 10% of your capital , you need $25,000 or £16K in round figures.
As for position sizing, I've never tried it.

 

[Naz]

I think we should remember that spread betting is actualy betting as the word suggests and the odds are made by the betting firm.These are not necessary a true reflection on the market but the odds which that company wishes to do business.

I can understand that spread betting firms may wish to promote trading the Nasdaq in a less favourable light because of the potential winnings that their clients might make if its true movements were allowed to be traded.

Lucky enough US brokers allow their clients to trade Exchange traded funds,which are tracking stocks that mirror the large indices.These can all be traded with direct access and a typical spread on a round trip on the Nasdaq with island can be 4c(or 4 points as spread betters like to say).Mind you with direct access astute players can can trade it with 0-2c spread on a round trip.

As these track the indices lets look at what would have happened in the latest fall in the last month.The DIA (which tracks the Dow fell from $106.50 to $101.50 a loss of about 5%.But the QQQ which tracks the Nasdaq in the same time frame fell from $39 to $33 a fall of approx 15%.Not only did anyone who shorted the Q's make 3 times as much than some one trading the Dow but trading the Q's actualy cost almost 3 times less.

Small wonder then that Nasdaq.com reported that yesterday approx 6 million shares were traded in DIA's(Dow tracking stock) but 78 million shares were traded in the QQQ's (Nasdaq tracking stock).I think that the volume transacted in the Q's is a true reflection of where traders in the US know they can make money!

 

[ihickling]

Having read the last two posts it seems (IMHO) that this is more a question of wether you are spreadbetting or trading futures or other such instruments

I think from what was posted the fall on the Nasdaq was worth 60 points and the Dow 500 points for a spreadbet trader.

So the margin requirement and bet size would be different on the Nasdaq to the Dow - 10 times the stake pp for Nasdaq, which would be riskier because the absolute value of the margin would be much higher - I think.

So as I understand it (or not) there is not a lot of difference in the profit potential, however if you can trade off level 2 data the Nasdaq should be more profitable than the Dow, which has no equivalent - is that right?

PS: as most spreadbetters lose then the Dow would be more profitable for the SB companies as you can lose more on less margin

 

[Mr. Charts]

Am I missing something here?
Why don't you guys trade electronically directly live in to Globex with instant fills and spreads of 0.5 point on Nasdaq emini futures ($10) and/or 0.25 point on S&P ($12.50) ? Why pay huge spreads to bookies?
That's the way I earn my family's living (plus US share day trading)
Mr. Charts

 

[ChartMan]

Yes. Very nice. This will go round and round. I have asked before for more details on various platforms and brokers etc. but it fell on deaf ears. As with all things, as time goes by, we get better and more experienced. The people on this board are here to learn from each other and I play my part giving as much as I can for the benefit of others. I for one, would welcome more information on, say, Globex. How you contact them, etc. etc. I have seen the benefits of trading "direct to market" and it is undoubtedly the most profitable, and potentially rewarding way to go.
So, Mr Charts, could you post further information re Globex, and anyone ese that maybe has gems that they have learnt and can pass on.
Those that trade using CFD's or SB's do so to the best of their ability and, except for "newbies" are fully aware of the pitfalls, spreads and biases that occur on these platforms. That's not to say they are happy with them.They just live with what they have until we, or someone else shows us a better way forward.
A classic example has been provided by Skim, who discovered the benefits ( mostly financial) in switching over to Sierra Charts from AIQ for a real time charting/data feed package at very low cost.
I'm sure if the rght info is put up here, we'd all benefit.
Final point in the equation, there are those that trade the DOW because it is "what they know and trust". Thay have no wish to switch to Emini's or QQQ because of the whole new learning curve. A binkered approach? Maybe.You can lead a horse to water, but if he's not thirsty? What then......

 

[ihickling]

Hi Mr Charts

"Why don't you guys trade electronically directly live in to Globex with instant fills and spreads of 0.5 point on Nasdaq emini futures ($10) and/or 0.25 point on S&P ($12.50) ? Why pay huge spreads to bookies?"

Please could you post further info on this

Thanks

 

[Naz]

I agree with Mr Charts post on trading the emini and the S&P.The reason that traders like myself trade the Q's is that i can trade Nasdaq stocks with my level 2 direct access platform and in the blink of an eye can use the same platform to trade the Q's.If your a good Nasdaq scalper you can use all your tricks by incorporating the Island book into your level 2 screen and not pay a spread at all.Utilising islands software will also allow you to manage the trade a whole lot better.

I for one have been writing on this bb,running courses,talking on tv,explaining at free seminars the benefits of trading the US markets with direct access for some time now.I hope regular readers and newbies will start realising how they are being hoodwinked by trading some platforms here in the UK.Does it not suprise you that most US brokers are not allowed to advertise their trading platforms here in the UK!

Chartman says "There are those that trade the DOW because it is what they know and trust".Technical analysis works just as well on the Nasdaq if not better,with higher potential profits by going long and short than many other markets.It dosnt take very long to learn new ways of trading the US markets with direct access saving potentialy thousands in trading costs.

The next free seminar i'm talking at is on Thurs 25th April at the Edwardian Suite,Royal National Hotel,Bedford way, London WC1 ODG.(tel number of the hotel is 020 7637 2488)The organiser tells me that from 2.30pm he is going to have live Nasdaq level 2 direct access for me to demonstrate. We shall see.Either way i shall be talking for free on trading the Nasdaq.Any one is welcome i'm sorry i have no idea what time it all starts as there are other people talking as well.I hope this helps.

 

[dojistar]

I have been paper trading for 3 weeks using Level2,since doing Naz's Nasdaq Level2 Course and have had my another PC running some of the time with my CFD account open so I can just have a glance over to see the difference between the exchange prices and the CFD prices,the otherday I was watching KLAC on the Level 2 screen and thought I spotted a good entry,the spread 2 cents,I looked over at the CFD price and a there was a lovely spread of 20 cents,the spread reduced to 5 cents 30/45 seconds later but by then the trade was missed and if I had entered the trade using my CFD account by the time I was filled I would have paid about 25/30 cents more due to the momentum of KLAC at the time.To be able to Trade For A Living you need to give yourself the greatest edge you can and trading with spreadbetting or CFD account isnt giving you that edge.If you are serious about Trading you have to trade with direct acces and if you arent serious about trading why give all your hard earnt to the spreadbetting companies and if you are doing well trading with CFD'S/Spreadbetting you could be doing a lot better trading with Direct Access

 

[Mr. Charts]

As I mentioned on another thread, I use netfutures(.com) but pay less than their advertised rates. Anyone wanting a personal intro to my friend at that firm - and pay less - can contact me: [email protected]
As some here already know, I train people on a 1-2-1 basis in swing trading US shares intraday using cfds, and also run a emini futures trading course.
However, I am NOT saying this by way of self-promotion - I trade for a living, not teach, though teaching does make an enjoyable change sometimes.
I am perfectly happy to help as much as reasonably possible by answering specific questions here, but they do need to be focussed. This is a profession and it requires education and experience to be successful and it's impossible to give short answers outside of their context without distortion.
I use Patsystems directly into the Globex market through netfutures - it is a superb system which has never let me down and the fills are virtually instantaneous.

 

[flea]

Just a suggestion

This thread seems to meander from subject to subject. Wouldn't it be better to have threads that are more on subject, afterall anyone picking up on this thread would have to wade through loads of posts to find what he/she might be interested in.

If Naz wants to start a thread about trading off level2 that would be fine, he might also wish to pay Sharky a small fee for the constant promotion of his teaching services on this subject.

 

[ihickling]

Mr Charts & Naz

Thanks to both for the info you have posted. Look forward to the the event on 25th April.

Speaking for myself, as a new member to this board, the advice you have given here and other posts is much appreciated.

 

[Naz]

Lots of people in the UK are happy to go to a main agent to buy their new car,enjoy the comfort,the feel good factor, a nice chat with a groveling salesman and pay an extra £2000/£3000 for the privilege.Other people import cars from abroad or travel large distances to buy their cars from large new car import supermarkets to save that money.

If you dont buy a new car very often, feel happy going to the main agent, enjoy the salesmans freindship then there is nothing wrong with that, its your decision.But if you were running a business, purchasing new cars you would be a fool to keep going to the main agent and buying them retail.So it is with trading.When you do it for a living you treat it as a business and that means making sure you trade with business principles in mind.

The easiest trades in the market are when you take the trade with the crowd, feeling good with yourself.Thats more likely when you should be doing the opposite.(Read Valez's story of the band wagon, in Tools and tactics for the master Day Trader.)More often its the uncomfortable trades that work. So it is if you decide to trade slightly differently.It feels a little uncomfortable at first,it takes staying power to keep at it,for some its not for them but for others it puts a smile on their face.

They know that they're not part of the crowd here in the UK,but as a regular trader they can easily work out they are saving thousands.They can also see that where others have spreads they have virtualy none which gives them the confidence to manage their positions much better.Where a CFD might have a 20c spread on a US stock the Nasdaq level 2 direct access trader can capture that and make $200 whilst the CFD trader has to make that first on his trade to pay his broker.Trade this way twice a day with 1000shares and you'll be loosing up to $2000/week by not using direct access.

My contribution to this bb is to put a another view to trading the markets,which is different to the crowd.To make traders sit back and think.I also mention the bb at the free seminars i talk at, as well as mentioning it on tv.which i hope has attracted more viewers who will read many of the threads, to get a very balanced view of trading the markets and make this a very interesting bb to visit.

 

[Mr. Charts]

To SR
My reply to your email keeps bouncing back undelivered
Could you email again please?
R