{"id":89,"date":"2008-08-02T08:29:22","date_gmt":"2008-08-02T12:29:22","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=89"},"modified":"2008-08-02T12:22:23","modified_gmt":"2008-08-02T16:22:23","slug":"be-in-the-stock-when-its-moving","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/be-in-the-stock-when-its-moving","title":{"rendered":"Be in the Stock When It’s Moving"},"content":{"rendered":"

As we have mentioned previously in my blog some have emailed me with concerns that program trading will rule trading soon.\u00a0 The market will never displace the disciplined independent trader.\u00a0 What is certain is that programs mandate that you adjust your trading and more selectively choose your entry points.\u00a0 Let’s take a look at ELN from yesterday to illustrate this point (chart below).<\/p>\n

ELN had trouble trading below 10.90 and above 11.10 on the Open.\u00a0 The stock traded above 11 and below 11.\u00a0 We call this the Above Below Program.\u00a0\u00a0\u00a0Our desk isolates the more prevalent trading programs and has a strategy to trade against them.\u00a0 When you see the Above Below Program you cannot tell whether\u00a0your stock will trade higher or lower.\u00a0 Don’t try and guess which way the stock will move.\u00a0 And do not trade the stock until it moves away from 11.<\/p>\n

Too often new traders take mini rips trying to get long at 11 when the bid holds and get short at 11 when the offer holds.\u00a0 And the bids drop and you hit the bids for a small loss.\u00a0 And the offers lift so you pay the offer for a small loss.\u00a0 It’s like death by a thousand cuts.\u00a0 These small losses can really add up.\u00a0 Pretty soon you look at your P&L and you have lost $800 and the stock has not moved.\u00a0 And maybe worse-\u00a0the programs irritate you such that your mental state turns from calm to frustrated.\u00a0 This is example of trading poorly against the programs.<\/p>\n

Since so much volume was done near 11 you watch closely to capture an explosive move in either direction.\u00a0 But since the move is going to be explosive you do not need to be in the first ten cents of the move.\u00a0 That first ten cents is the hardest part of the trade.\u00a0 As discussed in the last paragraph you may continually get shaken out for small losses.\u00a0 Let the stock move away from 11 and play the momentum.\u00a0 So for example let ELN trade above 11.10 and then play the upside momentum.\u00a0 And get short ELN when the offers holds below 10.90 and play the downside momentum.<\/p>\n

This small adjustment combats the Above Below Program.\u00a0 Be in ELN when it’s moving.<\/p>\n

eln.gif<\/a><\/p>\n

Good luck with your trading.\u00a0 And enjoy your weekend.<\/p>\n

\u00a0Mike Bellafiore<\/p>\n

SMB Capital, Partner<\/p>\n","protected":false},"excerpt":{"rendered":"

As we have mentioned previously in my blog some have emailed me with concerns that program trading will rule trading soon.\u00a0 The market will never displace the disciplined independent trader.\u00a0 What is certain is that programs mandate that you adjust your trading and more selectively choose your entry points.\u00a0 Let’s take a look at ELN from yesterday to illustrate this … Read More<\/a><\/p>\n","protected":false},"author":144,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,10,15],"tags":[22,29,30,18],"class_list":["post-89","post","type-post","status-publish","format-standard","hentry","category-general-comments-2","category-mike-bellafiore-bellas-blogs","category-trading_theory","tag-day-trader","tag-prop-trader","tag-prop-trading","tag-smb-capital","no-post-thumbnail"],"yoast_head":"\nBe in the Stock When It's Moving | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/be-in-the-stock-when-its-moving\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Be in the Stock When It's Moving | SMB Training\" \/>\n<meta property=\"og:description\" content=\"As we have mentioned previously in my blog some have emailed me with concerns that program trading will rule trading soon.\u00a0 The market will never displace the disciplined independent trader.\u00a0 What is certain is that programs mandate that you adjust your trading and more selectively choose your entry points.\u00a0 Let’s take a look at ELN from yesterday to illustrate this ... 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