US Daily Trades

[Grey1]

Steve,

Get into L2.. You only need 20 minutes to understand the basics and the rest comes from the CHART .. Without L2 you are exposing yourself to extra risk .. I have given many example of application of L2 in Risk analyais and its practical implication .

regards

 

[DaveGos]

Gray1 or Paul

I've just come out of a VWAP trade on CKFR, short at 12.05 ( 35.07 ) Covered 12.50 ( 34.52 ). The reason for taking the trade was that the underlying index was over -.5% and falling, on the 5 minute chart the price was below the body of what had been a doji. Additionaly on the market depth there were some 3000 at 35.10 on the ask and no large orders above this.

My questions are:

1) I am not sure when using the +- 50 rule whether this refers to the Dow or the underlying index, in this case the Dow was positive while the Nasdaq was negative.

2) Prior to reading your postings regarding the use of Level 2 I have not used it, over the last month or so I have been using the free service provided by Quotetracker which only gives Market depth and not the MM. In your opinion is this enough or do I need a full service feed, if I do then I am going to have to get some training.

Just looked at the chart again, if I'd waited another half an hour it hit VWAP.

 

[Grey1]

Dave .. Well done for your trade .. I know you made $$ and well done.. I also think your reasoning for taking the short position was sound enough however, IMHO you made a slight error in going short,.. We donot not fight the market .. We must trade in the direction of market.. win or loss

So you should have gone long when DOW > 50 while price below VWAP.. (you should have looked for stocks which their price was below VWAP and long them )

In VWAP strategy we ALWAYS trade in the direction of the DOW if we take a directional ( single ) trade.. When market oscillates we pair trade ..

On the positive side you shorted CKFR well away from its VWAP. It is best to take a postion well below or above VWAP to make sure there is enough reward to justify the trade..

CKFR VWAP is currently 34.48 while price is 34.20

your reasoning about L2 makes was spot on .

regards

 

[DaveGos]

Thanks Gray1
So it's the DOW rather than the index which the stock is a constituent, in this case the NASDAQ, which is used as the reference.

 

[Grey1]

DOW carries a much heavier weight as far as the market direction is concerned , NYSE trading curb refers to DOW than NAS to limit program trading .. So we all watch DOW..
S*P500 is just as good.

rega rds