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    Tuesday, October 7, 2008

    How I'll trade today

    I'm aware of all the calls for stocks bottoming around current levels (1050 in the S&P 500). It might or might not turn out to be the short term low, but I've made that prediction irrelevant for my trading. Recent shortened hold times are still in effect, and as such, I'm not heavily exposed to headline risk. I will be looking for signals to get long stocks index futures (most likely the NQ's) and to short bond futures (ZB), both for day trades only (for now). There are a few individual names that might work, but I prefer to stay in only the most liquid vehicles, in case I need a quick exit (less slippage). As I type, the Fed's meddling has reared it's head again, driving futures higher. It's important to remind ourselves not to chase the moves. There are plenty of trades on both sides, and odds are that we'll have another setup very soon!

    Yesterday I utilized an old "trick" I learned from my days on a trading desk. With futures gapping down huge, I put in limit orders way below the previous closes on several of the less liquid vehicles I watch, IGD being one. I was filled by the crook specialist on a HUGE gap lower, which immediately moderated. IGD printed much higher so the specialist could rape everybody, and this could have been an effective 2 min trade (+6%) had I exited. I did not exit, as I was pushing for more, but the point is that I put the specialist's book on my side. Anybody in their position is temtped to "steal", but that doesn't have to hurt you if you bet with the "fix"! In any case, I scratched the trade, and will look to do the same again today.

     Links I like:

    -Excellent post by Brett Steenbarger.

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