Secrets the Stock Market Doesn’t Want You To Know
Secret #1
I have a screen in my trading platform that shows me the volume of all the trades for the day at a specific price. It does another thing that I find quite interesting and this I find more interesting at the moment. It displays sales on the ask by a light color and sales on the bid in a dark color. What I’ve noticed is that most of the volume has been dark. All the way up since Monday and people are selling. The market shouldn’t be climbing. By the colors it should be tanking.
Secret #2
There is also another reading that shows the bid and ask prices. According to the rules I can’t place a trade order except by penny increments. And yet, most of the time every single time that this “melt up” is happening I see the sales going off in increments down to the one 10-thousands. Instead of 45.01 or 45.02 I’ll see prices like 45.0305 or 45.0002.
This I see as evidence of an unfair disadvantage placed on the retail traders (people like you and me) by High-frequency Traders (HFT’s) and computer-driven trading programs (ALGO’s, short for algorithms) that are distorting the market. This is one aspect of the financial markets that wasn’t even mentioned in the Dodd-Frank Act, the official name for the financial reform bill recently passed. There was nothing in the bill that even hints at correcting this injustice.
Secret #3
Then we have the occasional article to remind us, the retail trader/investor and the general public, isn’t even allowed into the game. One of these articles is Can You Hear Me Now? 17th Weekly Fund Outflow As Equity Fund Redemptions Accelerate.
One of the techniques I use to function in today’s markets is a form of trading judo. I use information like this to get a longer-term view of the market and trade around it. I’m not always successful but not being one of the “In” crowd doesn’t allow me to eliminate risk, only to lower and limit risk.
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