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SAWN WROTE:
"I still think that the MM box and Level II screens are vital if you're
going to scalp."
Yes if you're gong to scalp. But I would question why scalp vs longer
trading (1-2 days, 60 minutes, 30 minutes, etc). IT's more work and the
probablities of loosing increase ecause you're making more trades through
the you are taking only a small portion out. And no question there are
those out there who do make money in SOES scalping but then there are those
that loose too probably about the same porportion as those who loose money
in stocks swing trading off of level 1. So I would ask again is SOES worth
it? Many loosing traders think that all their problems would be solved if
they had more informaiton which would translate into better trading and that
shorter time frames = more money when in reality the problem is more
fundmanetal in their trading. Can knowing what the hammers are doing,
albeit after the fact because prices don't show up in SOES until after the
primary transactions have completed, be gleaned from volume on a level 1
stock chart, Bid/Ask etc? (I don't ST trade stocks). What was the time lag
like between when the actual transaction was done on another invisible
system and when it showed up on SOES? Does this mitigate the usefulness of
the signal? While SOES might be real useful for YAHOO (not that you can't
trade YAHOO without it) we know that many traders like the smaller cap
stocks where the big boys don't play usually and the pastures are greener
with newbies. So is SOES really necearry in the smaller markets? I also
find it interesting that you have left SOES like others on this list. If I
were considering trading SOES, this would make me think twice about it.
Your insigt on this issue is great and I'm sure many benefited from your
description of how you use of SOES.
Brian.
-----Original Message-----
From: SHAWN [mailto:Shawn.Devlin@xxxxxxxxxxxxx]
Sent: Wednesday, November 04, 1998 7:43 AM
To: Brian Massey
Subject: RE: Level II
> Date: Mon, 2 Nov 1998 22:34:59 -0800
> From: "Brian Massey" <bnm03@xxxxxxx>
> To: "List, Omega" <omega-list@xxxxxxxxxx>
> Subject: RE: Level II
> 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.
>
<SOME MAJOR SNIPPAGE FOR BREVITY>
> 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.
To answer your last question, I did like to see the MM box, even if
it was pure crap as far as what the actual hammers were doing. The
hammers are the big dogs in a stock. Usually like Goldman, Morgan
Stanley, that ilk. They very seldom showed their actual intentions or
volumes on the MM box of Level II screen, as I suspect they did most
of their real trades with other good ole boys via instinet, ISLD, or
other private exchange vehicles where they could prefernce each
other. I also think they signalled each other via those same
mechanisms.
So what is a MM box or Level II screen good for? Even if the hammers
did most of their business privately, it eventually showed up in the
prices and bids/asks they had to post to be MM's. The other thing it
was usefull for was to see what other SOES and electronic daytraders
(like E*Trade or Datek) were doing as well as retail customers. Some
of us felt that watching SOES an retail customers' orders was a sure
way to make money. By and large, they followed herd mentality, and if
you could get on the side with the real MM's you could pluck money
from these "stupid" traders regularly. Hell, you would so retails do
the dumbest things just because it was a nice round number like 95 or
100. They were just numbers, like 94 15/16. So what was the big deal?
No big deal, but SOESers and retails could be counted on to jump on
or bail at the first show of these round numbers. Some of us knew it,
and certainly the MM's knew it. It was like gunning the stops. You
knew where they were and you knew market would get pushed down to
there. You just had to time it right so you didn't get clocked by the
MM's when they pulled out and punished the "stupid" traders.
And that's what the MM box did for me. I don't SOES trade any more,
but that's a personal preference. I still think that the MM box and
Level II screens are vital if you're going to scalp. If you're a
position trader, and you want bigger moves, then its usefulness fades
a bit. But if you learned how to read the MM box, you could feel the
momentum for quick trades. Especially usefull when trading
high-volatility stocks like YHOO. You damn sure wanted to know when
GSCO left the bid or ask, and showed up way down the box, even
with little volume. Things were about to change real quickly. And if
you've ever watched YHOO trade, you could have your head ripped off
in a matter of seconds if you didn't know where the hammers were
going.
*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*
"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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