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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade
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To: William W. Dwyer, Jr. who wrote (2013)7/17/1999 3:04:00 PM
From: E. Davies   of 2120
 
A better approach, imho, is to buy at the ask one level above the bid, get a quick fill (rather than having to chase higher and higher) and sit back, wait for the stock to climb, or dump it quick if the sellers start hitting the bid

Could you go into a little more detail as to when you choose to buy? Do you look for breakout type patterns or something that is in a steady climb? Do you look to buy at places unlikely to hit resistance soon such as not on whole #'s?

Since you are immediately giving up the spread do you aim for stocks with small spread? Also do you look for stocks with slow enough movement that when it starts to sell it wont lose a full point in a few seconds (means avoiding the really hot stock of the moment)

So far the only thing that has worked for me is to buy *at* (not even 1 tick above) a major support level when the stock is selling. If you get in, you tend to get in when the sellers are tired out. If you dont, better luck somewhere else the next time. Bad move expect the same support level to hold on the second pass through.

As the buyers get eaten through often one MM will stick it out and absorb vast selling himself. Even if the stock downticks so the ask is at the support level more buyers kick in. A good choice of a support level will almost always give you time to get out with a teeny or flat even if the direction does not turn. I have a lot of trades where the loss is just the commissions.
Eric
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