|
PureBytes Links
Trading Reference Links
|
I'm incline to initially agree with Brian here but I still do not know
enough to disagree with Shawn.
The obvious negative would be the cost of level 2 verses level 1.
Commissions are ruffly twice for level 2 and the quote system fees not
depending on locking yourself in to x amount of trades to get the free
services is more than twice that of level 1. So you start out with a higher
fix overhead which demands more trades which presents more opportunity for
loss. The thinking of the public and what is advertised is the advantage of
level 2 because of seeing the inside MM. I would agree if this takes away
the need to be a good trader and depend only on your advantage like a pit
broker can in the futures pits. If trading ability is required then I would
say level 1 is the better way to go. Any comments from those you have done
both might put some more input on this discussion.
Robert
Brian Massey wrote:
>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
>
>
|