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SHAWN wrote:
"But the simple fact was that the best traders in my shop were the ones who
had no market opinion, didn't watch CNBC, didn't read WSJ, didn't care what
the news was. They just traded stocks on momentum."
There you have it. Price and momentum = the right information = makes any
market tradable (futures, level 1 stocks, level 2 stocks, mutual funds,
whatever...) = the needs for SOES level 2 information questionable. This
was my point, if you're trading on price action then I believe you don't
need all the MM and crap delivered through level 2. This idea is supported
by people who have tried it and left -- such as Mr. Augustine -- for other
non-level 2 markets. I stated that stocks (such as INTC, DELL, MSFT, etc)
are eaiser to trade than futures because stocks -- in almost any market --
trend better (all timeframes) than most futures markets. Price patterns at
turning points hold up well and are most of the time clearly visible.
OB/OS/MOM indicators hold up very well in the markets I listed. In thinner
stock markets, these indicators might not work as well. For me, almost
everyday and the next day's open has implications for daily direction and
market tone for that day. In the morning this tone is either confirmed or
rejected. Here's a tip: intraday markets (I'm thinking futures) generally
have two dominant thrusts - one up and one down. If the market doesn't go
up significantly during the upthrust in the morning then guess where it's
going come afternoon? Sometimes the up way overshadows the down and visa
versa. There were several of those today. In most cases, the velocity and
distance of these thrusts (or lack of) determine how big the other will be.
This is part of my context I fit a market to when I go into a day. It
doesn't hold up all the time, but generally I can count on it. You may think
this is crap but I believe it's this kind of information that gives me the
best most reliable picture of where price is going. I also extend this
thinking to a weekly timeframe.
This is an example of trading with price.
"It was really hard to clear my mind, not have opinions about what should
happen, and have the discipline to let the prices solely guide me. But I
became a much better Level II trader when I did that."
My questions is: if you let price guide you, why do you need SOES and MM
information? Level 1 should be more than enough information for price and
MOM.
Brian.
-----Original Message-----
From: SHAWN [mailto:Shawn.Devlin@xxxxxxxxxxxxx]
Sent: Monday, November 02, 1998 8:34 AM
To: omega-list@xxxxxxxxxx
Subject: Level II
Brian Massey wrote:
>Stocks are attractive because there's so many liquid markets
>available and if you can trade futures succesfully (even moderately)
>(i.e. S+P) you should be able to trade a market like DELL or INTC or
>MSFT or LU well using just Level 1 information. But I would make
>certain that the reason why a felt I wanted to switch was to reduce
>slippage and not some other more fundamental trading reason. I
>would ask myself if faster execution is really going to improve my
>bottom line.
Here's my take on a couple of points I've seen so far in this
discussion. First, the one thing I like about stocks vs. futures, and
this is purely my spin, is there is no expiration. You can't play
contango, backwardation and roll games, but that's OK by me. I never
was good at those games anyway.
Secondly, Brian wrote above, about trading DELL, INTC, MSFT, LU. In
my opinion those stocks that are the most visible and liquid are the
hardest to trade. Look at it from the standpoint of Goldman or
Merrill. If you have 10 times the volume of trades in DELL as you do
in WXYZ, wouldn't you put your best trader on DELL, and train your
greener traders on WXYZ? I would. You know they have a bigger book in
those big stocks, and more turns per day, so you know they put their
best sharks on them. They just have more exposure.
The final thing I have to add at this time is about information. When
I started SOES trading I had moved over from futures trading. I felt
in futures trading, the more info you have the better off you are. It
was hard to get rid of that idea in SOES trading. But the simple fact
was that the best traders in my shop were the ones who had no
market opinion, didn't watch CNBC, didn't read WSJ, didn't care what
the news was. They just traded stocks on momentum. It was really hard
to clear my mind, not have opinions about what should happen, and
have the discipline to let the prices solely guide me. But I became a
much better Level II trader when I did that.
Furthermore, some of the best money I made was trading stocks I had
no idea what they wer, what industry they were in, what the news
was, or anything about them other than their ticker symbol. We'd
watch New Highs/Lows after 10:30 and pick up a flyer or death-spiral
now and then and just go with the flow. And some of those flows were
huge.
I could write a book about what I've learned about Level II trading,
and the games people play. Maybe I should ; > )
Just my $0.02.
*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*
"It's hard to make predictions, especially about the future."-Yogi Berra,
Visionary, 19??
"I think there is a world market for maybe five computers."-Thomas Watson,
IBM Chairman, 1943
"640 K ought to be enough for anybody."-Bill Gates, Microsoft Chairman, 1981
"With over 50 foreign cars already on sale here, the Japanese auto industry
isn't likely to carve out a big slice of the U.S. m
arket for itself"- Business Week, 1958
"TV won't be able to hold on to any market it captures after the first six
months. People will soon get tired of staring at a p
lywood box every night."- 20th Century Fox's Daryl F. Zanuck, 1946
"Don't sweat petty things. Don't pet sweatty things."-Anonymous
"When you are courting a nice girl an hour seems like a second. When you
sit on a red-hot cinder a second seems like an hour. That's relativity." -
Albert Einstein
Shawn Devlin
mailto:shawnd@xxxxxxxxxxxxx
http://www.netcom.com/~shawnd/shawn.html
http://www.netcom.com/~shawnd/joke.html
http://www.netcom.com/~shawnd/spar.html
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