To Darren, Steve & eski-
Thanks for the comments on L2. My recollection of what Wolff has said during classes has been that L2 execution is essential. Also, when he points out a potential entry point for a trade, he will say "watch for selling at 17 7/8. I would exit if you see selling at 17 7/8." I have tried watching for selling or watching for buying with L1 and I have found it essentially impossible. That is why I am going to a L2 broker. I am pretty sure that Wolff used to trade with Datek, tho he mentions having tried nearly every broker. He has definitely said during class that rapid execution is essential. I believe that this eliminates L1. I got so I could move pretty fast with Datek (or Schwab before that) but you are still talking about minimum sixty seconds from start of entry to execution. The quote steve cited from Wolff's FAQs refers to looking at MMs for picking an entry. Wolff looks at quotes only (he says) and T&S, not MMs. He has a curious (IMO) lack of interest in MMs, axes and such. BUT--the answer to the FAQ does not refer to executions. Obviously, L2 execution would not be MORE useful with a slow moving trade. A slow moving trade is just what I have been successful at trading with Datek, which is L1. The majority of trades that daytraders make their bread and butter on are "scalps"--small fast profits on quick bounces in well known stocks like SEEK, NSCP, etc. These trades require L2 execution. I know, because I have been sidelined on all of these type trades that turn up all the time in Wolff's room. If you don't have L2 execution, you can seldom cover your spread on scalps, especially since Datek will scalp YOU any chance they get. To make money trading L1, I had to learn to "lead" my trades: guess what the price would be a minute after I entered. So I could only make money on a play where the bounce was at least a half. This is a tough road and not what most daytraders live on. If anybody out there is doing great with L1, I would love to hear about it.
Rick
Ps. Wolff is a fervent advocate of MBT, which is L2. |
