Daniel,
Right. I am considering the suggestion of another person on this thread to try MSN as they are on UUNET. I am not quite ready to move to ISDN so a backup ISP is worth a shot.
Glad to see you are joining MBT. Realtick 3 is incredible software and MBT knocks themselves out to take care of customers.
Concerning L2: You are right that a big line up on the bid does not automatically mean the stock is about to move up. If the markets are heading down, for example, a stock has to have a news story to make it "fight the tape" normally. So you have to look at lots of factors. Some stocks are just wimpy acting at times; others are gorillas. I like to trade XCIT, for example, as it has a fanatical following that thinks it should go higher.
The lineup on the bid or ask is significant in the context of movement. If a stock has been heading down and you see few MMs on the bid, the odds are the stock is pretty weak and may be likely to head lower. Doesn't mean it will for sure, but it is a definite indicator. Another is how far the stock has dropped compared to how far it usually dips. XCIT, for example, may dip a buck on a market downturn, but it is very unlikely to go lower without a bounce. Most XCIT traders know this, so even though the bid may be thin, when you get a certain percentage of selloff, a bounce becomes increasingly likely. The bounce may well come BEFORE the bid builds if the markets are weak. Now if the ask is very sparse in this situation, you can get an idea how good the bounce will be. I especially look to see the ISLD inside ask in this situation. If the lowest ISLD inside ask is three ticks up, I'm going to buy on the percentages. Of course, if volume is real slow, I would want to see something solid on the bid side before I buy, especially two ticks down. I don't want to get caught in a shake that goes three or four ticks the wrong way before I can get out. So depth on the bid does show support. You are looking for good odds, not certainty, and L2 can definitely firm up your odds.
Rick
PS. One thing I did on RT3 was to make my L2 window default setup with a TOS window attached on the side. Seeing the prints is vital to figuring out what the direction is. If you see a lot of depth on the bid and sparseness on the ask and the prints are going off at the bid or lower, something very weird is going on. Sometimes a stock's downward momentum will carry beyond where it really should, considering the market may be rebounding strong. This is a solid buy opportunity. This is kind of typical with XCIT. It's as if the traders are on autopilot at times and it takes them time to turn around and head back up. If you know the stock you are trading (I recommend this), you can get the drop on other traders for a nice bounce. Takes guts to buy when they are sellling, of course, but that's the whole game in a nutshell IMO. |
