Trading the markets with Alan Rich.

[TrendTracker]

Thank you Bramble.

Did you see the question regarding the tape?

Samuel

Hello,

Alan is using L2. As far as I understand it is an integral part of his trading. Therefore a discussion on L2 should be okay.

Sam, I've seen it too and often wondered what is going on. Please, correct me if I'm wrong but did you refer to a situation where Time&Sales is all red but the price keeps on ticking higher although red means that bids are taken (price should then fall). Does anyone here know how or why this happens?

Cheers,

TT

 

[dvdh]

Hello,

Please, correct me if I'm wrong but did you refer to a situation where Time&Sales is all red but the price keeps on ticking higher although red means that bids are taken (price should then fall). Does anyone here know how or why this happens?

Cheers,

TT

Hi TT,

first of all. A bid is given. And an offer is taken!!! LOL.

Second, of course this can happen. This means someone is buying on the bid, but there are also sellers, because you see red coming through T&S. But what this buyer does is. He comes in on the bid with a reserve order. Which means showing only 200 or so, but as soon as they get given, he comes in with another 200, so people don't know how much he's gonna buy. And he comes in with a higher bid every time. Or when the market is 21.22 at 21.23. And this guy comes in 21.23 bid. Then you'll see red coming through time and sales.

You see,

-Dave.

 

[TrendTracker]

Good morning Dave!

Great to hear from you and thanks for correcting me. I'm not yet familiar with all the jargon. In fact, most of the time I can't even get my Finglish right...

Thanks for the explanation too. It makes sense. What did you trade yesterday? Any good ones?

Cheers,

TT

 

[TrendTracker]

Actually, personally I found it to be another very nice day.

Hello Richard!

This shows me how much of a learner I still am. I already thought I knew something. Obviously not! I need to work on my approach.

On a high volume day everything feels almost too easy. I just go with the flow as I see it happening on L2 (often when we get a new high or low). When a move dries up and reverses I get out. This results in a lot of trades but works extremely well when there's direction in the market, accompanied with high volume of course. This is what I meant by being fluent in L2 reading.

The stops I have are mental ones as I get out as soon as there's a loss of 3 to 4 cents. During the fast market there's no time to start setting up actual stop loss orders. (Or maybe I'm too slow ) Now that I've learned this I'm so happy for participating in Richard's one to one. It gives me a lot of confidence to see that a thick head like myself can actually learn these things. However, trying to learn this stuff on your own would take a life time. Therefore, I'd strongly recommend that people would get training from guys like Alan and Richard.

But I'm still a learner. On the days when there is less volume, like yesterday my above described approach didn't quite work. Breaks into new highs didn't have the immediate follow through that I was looking for and I got stopped out too often with my 3 to 4 cents mental stop rule.

I need to go back and study what would have worked. I clearly need another strategy for days with less volume. Should I allow bigger move against me? Some people seem to place stops as far as 15c behind. I personally find it unbearable to watch a stock move that much against me. Five 15c losses with 1000 shares means -750usd plus the commission of 50 with IB. To cover that and turn your day into a profitable one you need one pretty good trade.

If the stops would be that wide then the entries would need to be very carefully chosen and the number of trades lower. What do the others think? As this is a thread on Alan's trades I'd love to hear his opinion as well.

Cheers,

TT

 

[Mr. Charts]

TT - about to do a remote micro analysis course on the phone for someone. Will reply later
R

 

[dvdh]

Good morning Dave!

Great to hear from you and thanks for correcting me. I'm not yet familiar with all the jargon. In fact, most of the time I can't even get my Finglish right...

Thanks for the explanation too. It makes sense. What did you trade yesterday? Any good ones?

Cheers,

TT

Hi TT<

you're welcome as always, pal.
I didn't trade yesterday. I had other business to handle unfortunately. Looked like a good day. A had a HUGE day on wednesday though!. I really like the way the markets trade lately. Good volatility and a boat load of volume coming into the markets.

-Dave.

 

[dvdh]

Hello Richard!

This shows me how much of a learner I still am. I already thought I knew something. Obviously not! I need to work on my approach.

On a high volume day everything feels almost too easy. I just go with the flow as I see it happening on L2 (often when we get a new high or low). When a move dries up and reverses I get out. This results in a lot of trades but works extremely well when there's direction in the market, accompanied with high volume of course. This is what I meant by being fluent in L2 reading.

The stops I have are mental ones as I get out as soon as there's a loss of 3 to 4 cents. During the fast market there's no time to start setting up actual stop loss orders. (Or maybe I'm too slow ) Now that I've learned this I'm so happy for participating in Richard's one to one. It gives me a lot of confidence to see that a thick head like myself can actually learn these things. However, trying to learn this stuff on your own would take a life time. Therefore, I'd strongly recommend that people would get training from guys like Alan and Richard.

But I'm still a learner. On the days when there is less volume, like yesterday my above described approach didn't quite work. Breaks into new highs didn't have the immediate follow through that I was looking for and I got stopped out too often with my 3 to 4 cents mental stop rule.

I need to go back and study what would have worked. I clearly need another strategy for days with less volume. Should I allow bigger move against me? Some people seem to place stops as far as 15c behind. I personally find it unbearable to watch a stock move that much against me. Five 15c losses with 1000 shares means -750usd plus the commission of 50 with IB. To cover that and turn your day into a profitable one you need one pretty good trade.

If the stops would be that wide then the entries would need to be very carefully chosen and the number of trades lower. What do the others think? As this is a thread on Alan's trades I'd love to hear his opinion as well.

Cheers,

TT

Remember one thing. This is a numbers game, not a $$$ game. I look at 3 minute charts, and I usually take the previous 3 minute bar break as my stop on the entry. It doesn't matter whether it's on GOOG, on AAPL or on MSFT. You'd say a 1 dollar loss on GOOG is a lot, so it's easier to take a 10 cent hit on AAPL then a $1 hit on GOOG. But it all depends on your position sizing. That's how I look at it. Don't look at the bucks, look at the numbers, so you don't get all emotional. You know what I mean? And if you can't suffer a $750 loss. Trade smaller and build it up gradually!

It works perfect for me, but I'm not holy so just think about it. Richard, what's your opinion on this? Of course when L2 tells me to get out earlier I definately will.

-Dave.

 

[Mr. Charts]

dvdh and TT,
Just finished giving course, need a break then prepare for market and my site.
I'll email you both over the w/e in response to questions and thoughts.
Trade well and make money this afternoon - as usual ;-))
Richard

 

[jimmy1jag]

This is an interesting discussion!

If I may add my 2 cents worth...:

For me size management is very important in order to protect my account, which, particularly as a learner is imperative. Risking 15c (+ IB commission) on a 100 share lot represents a very small amount (less than 0.1% of $25,000 min day trading account size); so when starting out this isn't really an issue. However, if you use mental stops you must honour them- imperative! If you place stops in the market, there is the danger that they might not get filled for whatever reason or you can encounter problems with slippage. Depending on the market and the orders on level 2, I might place my stop a bit tighter to allow for slippage.

Additionally, because of the negligible risk, there is the danger that you become blasé and overtrade... again dangerous, particularly when you get bored and fancy some action in front of the screen!

Discipline discipline discipline... very important and it's not easy.

I am fortunate in a way that I have a partner who is interested in the markets and what I do. I use her as my Compliance Officer! I have developed the attached sheet which has evolved as I have learned where my weaknesses are. The aim is to eliminate the rotten bits in my trading behaviour... to enforce discipline. My partner looks at the sheet at the end of the day so I have to behave

I use the following rules:

To use more than one sheet is forbidden on any one day.

Don't just file it away at the end of the day, use it as part of your preparation for the following day. I keep mine on my desk next to my keyboard, till I start the following day.

I fill in the sheet as I go along during my trading period, doing the summary at the end of the day.

This, I have found, has helped me to eliminate some of the bad bits of my trading behaviour.

If anyone has any comments on this, I'd be delighted to hear!

 

[Mr. Charts]

Nice one, James.

Just a few from from my HOT list today:
ERTS
ENCY
BOOM
SNDK
RMBS
EVST (reminds of that old Roger McGough poem that ended,
"......when she left, she put evostick in my contact lenses"

 

[Mr. Charts]

I hope some of you guys and girls got the breakdown through 6.00
Loads of liquidity so you can take large numbers of shares.
I'm half out for a clean 20c and the other half running with a stop of 5.83
Richard

PS ENCY

 

[Mr. Charts]

Trailing Stop (TS) dropped to 5.80

 

[Mr. Charts]

Covered remaining half at 5.66 as momentum changed.

 

[Mr. Charts]

That looks like the right decision reading the turn on micro-analysis; it's now back up to 5.86

 

[dvdh]

I hope some of you guys and girls got the breakdown through 6.00
Loads of liquidity so you can take large numbers of shares.
I'm half out for a clean 20c and the other half running with a stop of 5.83
Richard

PS ENCY

MY GOD YES. I was short ENCY from 6,18, because there was a HUGE seller at 6,20. He got waaaay over 150k there. So I shorted from 6,18 all the way down to 6,05 and covered all at 5,71.
This one's very liquid. I like it a lot.

-Dave.

 

[Mr. Charts]

Trust you to read the signs, Dave ;-)
I thought you were that big seller at 6.20 !
Of course, you've got more sense than to try to bully the market ;-)
BIG moves on the one min candles with 5 out of those 6 HOT stocks; the other one had too low a volume to trade.
Don't you just LURVE these markets ;-)
Richard

 

[Mr. Charts]

SNDK and RMBS are a real swinging couple; up and down 25c/50c at a time.
Richard

 

[dvdh]

Trust you to read the signs, Dave ;-)
I thought you were that big seller at 6.20 !
Of course, you've got more sense than to try to bully the market ;-)
BIG moves on the one min candles with 5 out of those 6 HOT stocks; the other one had too low a volume to trade.
Don't you just LURVE these markets ;-)
Richard

No, I never try to stop the market from going higher or lower. A couple months ago, I would be selling the 20's, but I would end up screwed too many times. So now I wait for a little confirmation on L2. And I'll be shorting the whole way down. Trend was down too on the 3 minute from the open. Many will disagree on this. But watch the premarket 3 min chart, and you'll see a downtrend. That's also a reason why I shorted. I always short upticks and buy downticks in a trend.

-Dave.

 

[dvdh]

SNDK and RMBS are a real swinging couple; up and down 25c/50c at a time.
Richard

Didn't catch SNDK. Can't trade all of'em. LOL.
But did catch a nice short on RMBS at 28,61 down to 28,50. covered at 28,00 and 28,07.

This market is ROCKING!!!!!!!

-Dave

 

[TrendTracker]

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