Here’s How To Use The ECN’s To Get A Better Fill
The chart below is a
great example of finding the strength in the markets. I come in every
morning with as little bias as possible. I attempt to find the opportunities
that the stock markets present. I know the indexes have been down, but I try to
not let that cloud my evaluation of a stock setting up for a move to the upside.
My scanner was developed to search for specific
situations occurring on a universe of stocks. It performs these searches in real
time and outputs stock symbols as the criteria for the specific situations are
met.
This morning Altria Group
(
MO |
Quote |
Chart |
News |
PowerRating) began showing
up on my Scanner as exceeding its’ 52 week high and as having very large bids
appearing on the NYSE. My first trade was to buy some stock that was offered on
an ECN beneath the NYSE offer. This can happen as the person offering the sale
is not quick enough to remove the stock from the offer. I can then turn around
an sell the stock on the NYSE for a quick profit. This requires quickness. It is
not a guaranteed profit, but most of the time it will work if big bids are
present on the NYSE.
I started to trade the stock in a rapid fire
manner as it moved higher, unsure what was behind the strength.
The second major trade of the day in MO is
highlighted on the chart below. As it approached the price of 70, there were
large offers on the NYSE. I decided I would go long if the offers were taken
out. Since it is options expiration week, my assumption was that many options
players would defend the strike price on this large unexpected price jump in the
stock. If their defense failed, my guess was that there would be a ramp up in
price as they moved to cover their losses.
My reasoning played out and the price moved up to
just over $71,00 a share. My trailing stop took me out for a $1.00 gain.
(Time shown is PST)
Not all trades work out so well, but being
prepared to take advantage of them as they occur, at least gives me the
opportunities.
Michael Kestler is a full-time professional
trader and managing partner for Evolution Capital LLC., a proprietary trading
firm. Mr. Kestler specializes in intraday trading of NYSE listed stocks.
Before founding Evolution Capital LLC., Michael began his career on the floor of
the CBOE. Mr. Kestler was previously a Mid-Cap and Nasdaq Market Maker.
You can contact Mike at mike@evotrading.com