Orders, Level 2, Price Action ANDREW AZIZ SESSION 3
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Class Overview Class 1: Before Start Trading Trading Platform Class 2: Before Market Opens Finding the Stocks in Play Finding Trading Levels Class 3: Technical Orders: Market, Limit, Marketable limit Understanding Level 2 Price Action Trade Management Class 4: Trading Strategies Strategies Risk Management
Understanding Montage and Level 2 Level 1 Level 2 Market depth (Liquidity) Hotkeys Order entry
Market Orders Buy me at any price! Now! Sell me at any price! Now! You remove liquidity Limit Orders: add liquidity Buy me at this price (or better) only! Not higher! Sell me at this price (or better) only! Not lower! You add liquidity
Market Orders are like blank check, you may get some nasty surprises These sudden downward spikes are probably market orders getting filled almost 100% lower than market price. Previous day close 18 April 2017
Marketable Limit Orders Buy me now, but up to this price! Not higher! Sell me now, but down to this price! Not lower!
Level 2 Depth: Bid-Ask Spread: Market Makers Territories Bid-Ask Spread: 1 cent 0.02% slippage = 1cent/$34.76 Bid-Ask Spread: 11 cents %1.7 slippage = 11 cents/$6.42
Stop loss order will be placed in the market book. That is why I do not use hard stops, it can get manipulated!
Level 2 Signals Big Bids (big buyer): Beairsh! Big Asks (big seller): Bullish!
Level 2 Signals Volume & Traders Psychology Aggressive Buying: Buyers pay more on ask (why?) Aggressive Selling: Sellers accept less on bid (why?) Color in time and sales shows traders psychology
Level 2 Signals Aggressive Buying? Not really Buyers are not willing to pay more They are low balling!
Level 2 Signals: Big bid/ask are only close to current price are real. Other big numbers are kind of fake: NITF orders (no intention to fill orders)! NITF order
See it LIVE Yourself: https://youtu.be/vodd4ljdjyq
Level 2 signals are only one piece of information You have to look at other indicators too before making any trade. In this example, both the Scanner, 5 min and daily chart are also indicating a short position.
Price Action Candlesticks for Social Psychology
Bullish Candlesticks
Bearish Candlesticks A series of bearish candles shows bears (sellers) are in control of the price.
Price Action Analysis for Trade Management How to Use Price Action short Initial stop loss stop loss after first cover Note: I bring my stop loss to break even (b/e) after first profit taking. I did not wait, because of bullish pattern right after bearish pattern. Cover half in 2 steps Covered all Also, failed to make a new 5-min low
Initial stop loss stop loss after first cover short VWAP All out Cover half 50 SMA final profit target
Indecision candlesticks
Indecision for reversals
5-min Pattern Higher high, higher lows: Bullish pattern Lower highs, lower lows: Bearish pattern
Where did the uptrend start? Most people think at point D (wrong) Uptrend started after point B (higher highs, higher lows)
Trade Management How to Use Price Action in Real Trade Stopped out Bearish bar bullish bar Add more Short VWAP Low of the day
Trade Management How to Use Price Action in Real Trade
Trade Management How to Use Price Action in Real Trade
Engulfing Patterns: Reversals Signs
Trade Management How to Use Price Action in Real Trade
Trade Management How to Use Price Action in Real Trade
Float and Market Cap Low float Float (less than 20 million) Medium float (20-500 million) Large float (+500 million) Price Range Under $10 (stay away from them) $10-$100 (my favorite!) Any (usually +$20) Trading stocks with different floats is the MAIN reason of inconsistency among traders!!
THANK YOU.