T&S is a lot easier to read on stocks that have a moderate volume - i.e. not the Citi 300 million per day. CD is good to track moves over time. Certainly easier than trying to track ratio of buyers to sellers in your head.
Where you get the benefit is using T&S in conjunction with Level 2. Level 2 shows you intent and a lot of it is fake. For instance you might see a rising stock come towards a price on level 2 with a lot of size on the offer. When it gets there you see those offers shrink rapidly as orders hit it - this is a fairly good indication that the size was fake (or it's real and being eaten) and that in the short term a continuation up is more likely.
T&S alone will let you monitor the pace of the market. For example - if you see 2000 buys tick up, 2000 buys tick up, 2000 buys tick up, then 10,000 buys NO tick up - you know something is changing. Alternatively if you see diminishing volume as you tick up, this also tells you something.
So - you can see short term moves that would not be apparent on a chart or on the cumulative delta. If you combine this with price action - i.e. a short term move indicated by T&S/L2 that is occuring at a place price action dictates a longer term move could occur, then you have a chance that there will be follow through on the move.
The following user says Thank You to DionysusToast for this post:
I was at first wary of them given the bad things some folks say about them on the Internet, but I've come to believe they cater to the knowledgeable investor and hence hand you more than enough rope to hang yourself, which apparently some seem wont to do.
Tax reporting could be better.
Last edited by bnichols; March 4th, 2011 at 09:49 PM.
Reason: Just kidding
The following 3 users say Thank You to bnichols for this post:
Apart from the very occasional tiny bet on certain indices, I trade stocks exclusively. But I am based in the UK, so the stocks I trade won't mean anything to US viewers. Neither will the fact that I trade almost entirely via spreadbets. Been trading for a living since quitting paid employment Xmas 1997. Generally small/medium stocks.
The only US stock of interest to me at present is Smith Electric Vehicles. But that ain't available yet (Nasdaq ipo supposedly this year). I have a stake in Tanfield Group - the UK engineering company that used to own Smith, and which currently maintains a 32.2% stake in it. I'm naturally hoping that any pre-ipo hype will drive up the percieved value of Tanfield's stake - and crossing my fingers that Tanfield don't sell down their holding before the ipo announcement emerges.
Favorite Futures: Stock, Options and now Futures (ES)
Posts: 514 since Dec 2010
Thanks: 227 given,
Currently using TDA, with their ToS, which I had been playing with before the acquisition...
OEC for futures, although I have an equity account there too. Better commissions than TDA, so I've contemplated using OEC for all of my stock, ETF and options trades, but I don't think I'll give-up TDA for two reasons: ToS (great for options) and the data.
What brokers offer NYSE and NASDAQ volume, put / call ratio data, advance / decline info and / or the McClellan Oscillator?
I've checked with OEC, and they don't offer this data. OEC has TICK, TRIN and the VIX, which I like for sure, but TDA has those also...
In my July 23rd post I indicated that I was awaiting news of an ipo for Smith Electric Vehicles on the Nasdaq stockmarket.
The London-listed stock Tanfield Group (32.2% stakeholder in Smith) saw their stock price climb strongly last week (up 36% over 5 days), and responded on Friday by issuing a formal announcement which possibly indicates that the ipo is not far away now (depending on how one interprets the somewhat cryptic wording!).
The wording could alternatively indicate merely another private fundraising, similar to the one last March when, US investors privately pumped in $58m in 24 hours. But most forum discussion in the UK seems to interpret the announcement as referring to an imminent ipo.
Goldman Sachs are known to have been assessing market interest for several months.
Last edited by Breconeer; August 30th, 2011 at 04:25 AM.
Reason: typo error corrected