Description

My basic trading philosophy can be summed up by one simple quote:

"Trade the ticker, not the company" - Nate Michaud


Friday, February 21, 2014

Level 2 Example: PTOG Opening Action 2/20/14

Please begin by viewing my "Level 2 Basics" video before viewing this one!

Before jumping into the level 2 action, let's start by examining the chart setup and my mindset going into the day:


PTOG had a very strong day the previous day, mostly due to a sketchy PR about this oil company entering the marijuana sector. However, I don't care about the news, just the price action. PTOG managed to close up on the day almost 200%, breaking out past the morning high late in the day. I liked this strong closing price action, so I decided to take an overnight position. I slowly bought into a position at the end of the day, and I bought 500,000 shares to hold overnight from an average of $0.0215. The stock closed at $0.0234.

When starting a fresh day, you don't have a whole lot of chart action to play off of. Going into a new morning, there is really only one price point that I typically consider to be key, which is the previous closing price. If the stock can stay green on the day, or in other words stay above the previous closing price, it is a sign of strength and a positive indicator for the stock. However, if the stock goes g/r (green to red) or, in other words, drops below the previous closing price, that shows a huge shift in momentum and the odds of a large pullback increase.

The video below will show the level 2 action from the morning of February 20, 2014, as well as a real time chart developing. Please pay attention to how I analyze the level 2 in combination with the chart as it is developing.

Hope everyone finds this video useful, and please contact me with questions if you're having trouble!

Note: Video cuts off at the end - sorry about that!

video

Due to poor video quality, please view at this link:
https://docs.google.com/file/d/0B82U0eZh1EYQaUpPN3VQQnNNcTA/edit

28 comments:

  1. Hey Tim, thanks for the great work and inspiration! How do you assume, that a stock is gonna gap the next morning or in other words, what r the reasons for it to happen ? Thanks..
    (oh and btw, could u update ur promoters list? would be awesome since the one u have is little outdated)

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  2. Strong volume, strong close, big up day. Those are the factors with an OTC that make a gap up likely in my opinion. Soon I'll try to get my promoters list updated and posted.... it's been less of a priority for me lately as I've been far more focused on trading OTCs with volume than worrying about who is sending emails

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    1. As a followup to that, after a gap-up, a stock will either spike or crash. How can you tell what are the odds of it spiking or not at the open? Nate says that he sells his position, or part of it, if the volume is too big in the last few minutes, because those last minute buyers will become sellers right at the open.

      Thanks Tim!

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  3. Very good video bro, thank you! I tune into this blog daily just to see anything new! As a Sykes student, any and all knowledge is helpful!

    Adam Whitman

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  4. The commentary was extremely helpful, but it's hard to make out what the bid, ask, and print numbers are because of the video quality... If you could make another one using Livestream software or something (Snagit has very good software), it would be so much more helpful! If that's a hassle, no worries.
    -Challenge Student

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  5. Thanks again Tim - That's an extremely helpfull video!

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  6. Good info, but quality of the video is very bad.

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    Replies
    1. Sorry about the quality everyone! I'll get the issue corrected for future videos

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  7. What level 2 analysis software are you using? I use thinkorswim, but it isn't as helpful as the one you seem to be using.

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    Replies
    1. This is "DAS Trader," provided by Speedtrader or Suretrader

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  8. Tim great video, just what I need. What broker you used to buy PTOG in this scenario?

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    1. I traded PTOG at Speedtrader because there were no routing fees there. I would never trade a stock this cheap at a broker that has ECN fees

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    2. From your blog on brokers to use, you mentioned that Speedtrader charges $.0044/share commission, so does that mean buying 500k of share on PTOG will rack up a roundtrip of $4400? If price action does not go as planned and say you exit at breakeven price, that still seems to be an awful lot of loss, is the mindset to make even bigger gains and this is part of the game with OTC stocks?

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    3. give that post a reread, Speedtrader doesn't have ECN fees on otc stocks except for ARCA

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    4. What do you know about "Scottrade" ?

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  9. Tim, Thank you for your immediate reply. You're so blessed.

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  10. Thank you Tim, thanks for the other comments also!!
    more more more!!!!

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  11. Not much to add Tim except, again I think you articulate very well. Oh, and had the quality been good, it would have been an ever more helpful video. Really liked your scan settings.... here is to the next video. cheers, Kevin

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  12. that was super helpful, thanks for taking the time to record it!

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  13. These videos are the essence of trading. No matter what patterns you learn if you don't understand level 2, forget about it. I've learned more from you without paying you a dime than I've learned from everyone else. Thank you, may god continue to bless you and I believe you will be the most profitable trader one day.

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  14. appreicate it..
    vids quality could be better, having trouble with visually following.
    if ur too busy, just hire someone to capture the vids, u could prolly afford it ;o)

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  15. Tim, what does the blue color means in the level 2 there is baby blue and navy blue..

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  16. Might be a stupid question but where did you get that level 2? On ThinkOrSwim mine looks way different and the one you are using looks much easier to use.

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  17. Thank you for all your educational shares. I am a Tim Sykes' Challenge Student. I have truly come to embrace your approach. The fact that you selflessly share your knowledge speaks volumes of your heart. I pray God keeps you and your family in His Grace.

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  19. Hi Tim, thanks for sharing so much of your knowledge on trading. I've been studying your trading tickers dvd and found the main problem I've encountered to be primarily interpreting level 2 to identify key points where prices reverse their momentum. Is it correct for me to say that when the time and sales tape show large amounts of red prints that clears bids on level 2, the price action is going to look to fall and the opposite would cause price action to spike. also, when bids or asks are stack on level 2 without any movement on the time and sales tape, does it signify resistance to a certain momentum and indicate a potential momentum change?

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