t/a and level 2

[Trader333]

Gap Plays

Naz,

I think you do have a valid point about IB although IB do use SMART routing technology which is pretty impressive. The biggest issue would be if you had shorted the stock and the the ask collapsed and you hit a market order to get out as you really dont know at what price you would get filled. Of course with a direct access level II screen you at least have some time to see the ECNs leave the ask first which gives a warning of a possible collapse and can then just hit the MM or ECN you chose and are out.

It is an area that I am still looking into particularly with the loss of the Exptrader platform. With IB I would be happy to take some gap plays but not right at the open.


Paul

 

[Naz]

QUOTE]Originally posted by sifts2win
Hi again folks,

"we quickly found the stocks to watch in pre-market trading, homed in on one (Costco) that was going to gap big, checked out who the ax was and watched his moves when the market opened.

The software enables you to highlight the ax (major marketmaker)and it was easy to see what he was doing. The expected fall to close the gap didn't happen and we watched him holding levels on the Bid and then raising his bid price (buying) and when he switched to the Ask (selling) we knew the move was over. As soon as he pushed his Ask lower we followed him with a short trade and closed out when he simply disappeared off the screen.

Now I know Naz was lightning quick and obviously a real pro but we made $1375 on paper in 20 mins (1000 shares) just by following the major market maker's moves! We did have a chart next to us but we didn't use it. He was shouting and leaping about. It was a real buzz and you can see it must be addictive.

In truth if I had been trading the gap (to close) using TA it just didn't happen and I would probably still be staring at the screen hours later worrying about abandoning a trade going nowhere.

Meantime the Naz's of this world walked away after 20 mins to make another cup of tea.

In all my experience of reading books and attending seminars I came to the conclusion that to be taught one to one by an expert must be the only way to learn. The only traders I've ever met personally who are, or have made a serious living are Nasdaq level 2 traders" [/QUOTE]

That was a quick quote from a t2w memember when i was demonstarting a gap play during a course, the gap play didnt happen exactly as one would expect but by reading the level 2 screen i was still able to see what was truly going on and make the trade profitable.This is another main reason to be looking at the level 2 screen.It shows reality not dreams.

OLDUN.I think the best charts are e signal and tradestaion 7.Level 2 maybe lightspeed (etrade)and pointdirex.

However the level 2 platforms come in much easier versions and both these companies have a number of easier versions of Nasdaq level 2 trading platforms.You just pick the one that suits your style and ability and then move up when you feel inclined to do so.To try each one out i believe they all offer demo's.

 

[okwon]

Lawman,

If you are shorting to fill the gap and you're slow tell me how you are going to get a short on without an up tick?

Certain US firms provide 'bullets.' These are married puts that last for one day. You can short stocks without upticks all day as long as you have a bullet. Pointdirex is one of the few firms that provide bullets to retail customers. They cost around 1-1.5 cents per share. This is really an essetial tool for people that are actively trading NYSE and Nasdaq stocks. A must have for NYSE daytraders because of the lack of upticks when stocks are crashing on the NYSE.

Also, for Nasdaq stocks, I'm not sure if this has changed recently, but if you route your order to ARCA, you used to be able to get around the uptick rule.

 

[okwon]

QUOTE]Originally posted by sifts2win
The only traders I've ever met personally who are, or have made a serious living are Nasdaq level 2 traders"

I take it this person has not met many traders.

 

[Naz]

Whenever you write something in general there will always be the oppertunity to disect bits of it.

Of course one can short on a down tick in a number of ways as you point out, as well as double accounts,series 7 exam for instance,but the point was not to get an answer as how to be extra clever to over come this problem, but just show the problem the plain average trader would have in that circumstance.

 

[okwon]

Sorry. Wasn't trying to be clever. Just thought I'd point out that there is a tool that exists that allows shorting on downticks that people might not be aware of. I think you are at a disadvantage if you don't use them or at least have them available to you. They are widely used by traders. Bullets are available to average trader through certain brokers.

 

[Miki]

Okwon

I believe that Naz and this board have some kind of agreement that allows him to advertise his LII courses.

Otherwise this blatant hype would have been shot down in flames long time ago.

Another hint, try to rate him “Bad” – it wont work.

 

[Naz]

Gap play on Nasdaq stocks is something which works very well.Like all things that work having the right tools to do the job properly is very important.

I know that level 2 direct access is slightly different from the way that some might play things.There will be some that snipe at it and some that think it has some advantages.As this thread is concerned with level 2 and t/a i would think that this is the right place for me to write about it.

Those that know me know i get carried away with my enthusiasm for the subject and to the more reserved this might this might look like blatant hype.

Challenging tried and trusted ways of trading,ie like throw away your charts when you've got there because all the action is on the level 2 screen is bound to upset a few.But only by making bold statements can one make others sit back and think.

 

[Pollux]

Well said Naz - nothing wrong with a bit of sizzle in these posts! Most of the time I found you very staid & studious!!
Having spent time with you I would say you are VERY chart orientated for finding set ups, fib levels, supprt/resistance, round number s/r - only at key points you then switch to L2 for the kill! Seems to work pretty well...
P

 

[Lawman]

I agree Pollux, Naz seems pretty stable.

Seriously, I find that Level II is something Naz has a great passion for, and that is why he gets so excited about it. And as you say, he uses T/A as well!! (Hence the thread name.)

Still trying to get myself up to speed there, but trying to buy a house has put all that on hold. Messy!

Have a good trading week, whichever method you use...

Lawman

 

[Pollux]

He does love that tea though - do you think he has shares in PG?

 

[Lawman]

Maybe that's his SECRET.
Gonna get a cup right now!
:cheesy:

 

[Naz]

Make a quick kill on the open and grab a cup of tea.Thats my motto,then you dont give your profits back immediately.Otherwise you're that fired up you think you can walk on water and the next thing you know you take a large hit.

A cup of tea lets you sit back, think and watch the action,planning for your next move.

But you're both right the amount i drink during the day,i should have shares in PG!

 

[ChartMan]

Guys....... Stable is a four foot wall built on a two foot foundation with steel rods going down the middle and filled with concrete.
Ask youself " does that sound like Naz" ? Especially after he's creamed someone for a thousand bucks in seven minutes . :cheesy:
I don't think so.

 

[okwon]

Okwon

I believe that Naz and this board have some kind of agreement that allows him to advertise his LII courses.

Otherwise this blatant hype would have been shot down in flames long time ago.

Another hint, try to rate him “Bad” – it wont work.

Interesting point. Actually, I wasn't challenging the validity of trading Naz's level 2 style. I'm new and I didn't know he was teaching a course.

 

[Lawman]

Okwon
Firstly - WELCOME.
Are you trading using LII at the moment?
Been using PointDirex platforms?


Chartman
You make a very good point... how stable is someone who goes for a quick kill, then settles down to relax with tea??

 

[Mr. Charts]

Scooby,
Thanks for your kind comments. You were easy to teach though!
Will email shortly
Richard

 

[Scooby]

Easy!!?!??

Got the e-mail thanks and the Mrs says thank you as well!!

You are the man with Simple Nadsaq PDT.


Ray.

 

[Naz]

The open action can be fast and furious on volatile stocks.Once filled if there is no defined exit area, i often look for some kind of resistance or support on an ecn,say island about a dollar away from my entry.Then i offer my position out at that level just in front of a large order.Hiding the order is another option.Then when the market hopefully runs strongly into that area people will be sweeping the ecn book and soaking up trades in advance of where the stock is trading.If my position is offered out already, without even trying to exit the position it will be taken out as the momentum sweeps into that area.It also means that i've have just captured the spread as well.

This is a scalpers move which allows a trader to take large profits on quick moves.It takes away indecision.If i've already done my homework correctly on the stock i should only be trading it because its been picked for its potential for a strong move.

Doing it this way means of course that sometimes i'm left with some unwanted shares that haven't been taken off me and in this situation i just get rid of any remainder with another order.Sometimes its best to have a broker that charges per share and not per execution.This will get around scaling out of positions and incurring larger transaction costs.

On some level 2 platforms that allow you to offer out your full position on a number of ecn's at the same time,you do exactly the same thing but at different prices and as soon as you get filled away from the action cancel your the remaining two orders.A hot key'd stroke for "cancel all orders" is the one to use.

Nasdaq scalpers trade up to 200-300 times a day.Fast level 2 screens like lightspeed with lots of proprietary orders have been designed to give the trader the edge in these types of fast moves,thats why they use it.

For a much more stable type of trading,ie a lot slower and considered then there are other level 2 set ups that dont offer so many bells and whistles but are more suitable for trading at a more considered pace.

The thing about the open is that it moves fast and if you get it wrong it can cost you a lot in a loss.Having something like lightspeed gives you all the tools for quick decisive decisions.

I hope all this might help anyone that might want to consider trading the open,its not for the faint hearted and you can suffer some large hits whilst practicing to get it right.One way to get over this is to practice the moves with a demo platform.Its more of a level 2 play with a bit of experience and having the fast tools for the job.But its still using t/a and level 2.T/a finds the gap level 2 plays it.

 

[Scooby]

It is also fair to say that Naz is also the man at trading the Nasdaq especially with Level 2.

At present I am learning to Trade the way Mr Charts showed me which does not need level 2 to be profitable.

However that said and done I do know that at some point in the future when I am comfortable with my trading I will look to learning L2 to improve my entry and exit and increase my bottom line by giving me the edge. I just get confused easily and need to take it one step at a time

For this I would again seek the guidance of Naz or Mr Charts.

Having seen both I can not see a better winning formula than creating a "NazChart" Clone Now that would be cool.



Ray.