I have at time, and your idea is a good one, but there is one caveat, they're pretty damn tricky, and I have been caught in many head fakes over the years.
There was a time when AMD started a 50 cent uptrend for 2 hours, and then, the short sellers jump the stock. Why, because the got a 50 cent premium out of the retail investor. On many other times, AMD starting off down as much as 50 or 60 cents, would do a reversal and go up an equal amount, for the same reason, buy at a discount.
More than 80 percent of AMDs stock is owned by institutions. I don't think they trade, but they probably lend out their shares to Hedge Funds who play games with puts and short straddles.
Many a good trader I have met over the years has met his match trying to guess AMDs day to day direction. I can do it, I am guessing, 40 percent of the time. When I don't have a strong feel for it, I stay out, or I stay in depending which direction I am looking at.
You need to play the large block trades, retail is a non-factor. I sometimes set the volume filter at 10,000, and just monitor the trades exceeding that number. By watching the speed and direction of the large blocks, you can make a guess on which way to bet.
Nothing is guaranteed, and I have been in and out within an hours time, correcting a bad guess. If you try it, I wish you good luck, and be prepared to confront the challenge of your lifetime. |
