Bella,

I have question about getting in front of a big order.  I’ll use GOOG as the instrument. Suppose 600 is a major technical level, and GOOG has been trading around it for 1 hour. A big bid comes at 600.10. The next several bids are small sizes

at 599.75 or below. Let’s say GOOG is trading at 600.10/600.20. Now I enter a bid at 600.11, which sits on top of a cushion underneath. In the worst case, when GOOG traded through the big bid, the next bid is 35c away. And if GOOG falls with such a fervor, it is probably going to trade through a stack of bids before buyers step in to arrest the action. Applying getting in front of a big order for stocks like GOOG seems risky to me. A safer approach would be waiting for the stock to establish a definitive trend.

I am speaking from my own experience. I’d appreciate your insight for this particular rule – getting in front of a big order.

Thanks!

Azhao

I love your thinking here. I prefer the trade where in this case GOOG clearly holds above 600 and you play for a bigger move.

If GOOG holds above 600, a key level for you, then you can play this as a Trade2Hold where you do not exit until there is a Reason2Sell. If I am watching a stock at a key level, and notice in the Box (bids and offers on the Level II) and a very large, new and distinctive bid appeared, and then that bid stepped up, I might play for a scalp.  Get long in front of the new, distinct, stepping up Big Bid and hold until the Big Bid disappeared or decreased significantly.  Again this is just a scalp play. We have had some guys who are grinders and find these Big Bids and Big Offers and make solid trades.  But overall I love you concentrating on the bigger move.

Thxs for the question.  Great job working on your trading game.

Mike Bellafiore

Author, One Good Trade