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Non-Tech : MB TRADING
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To: Gary Korn who wrote (1023)9/6/1998 12:03:00 PM
From: TraderAlan  Read Replies (1) of 7382
 
Gary,

Interesting. You certainly will benefit from a direct execution system. Just keep in mind your slippage is likely to increase. That needs to be balanced by buying at the bid or between the spread and good exits at the ask.

My math is far from complete on this subject. Believe very good traders can do this but many, many fail as scalpers because a high losing percentage will accelerate losses (i.e. you're much more UNLIKELY to sell the ask on losers and MORE LIKELY to incur slippage).

After my first month of L2, I've concluded it is much LESS important to my strategies than I expected. My technical analysis will always be my edge and VERY often, the TA supply/demand contradicts the L2 supply/demand. I've held back and missed some very nice gains and intend to return to my number-triggered trading rather than relying on L2. Also think it's in my interest to actively trade AGAINST the EDT crowd at certain times.

A typical situation for me is watching big supply build just above a BUY trigger using TA support/resistance. As soon as the number is hit, there is a monster buy surge from the stops being hit, followed by traders seeing the stops being hit. The MMs disappear at the number, causing a surge through resistance and a nice 1/4 to 1/2 pt move. My intent is to buy at my TA trigger even if its below the L2 supply, i.e. get on board ahead of the reaction crowd.

Alan
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