I received the following email question from Reader David:
Good morning Mike,
Firstly thank you for taking the time to talk to me the other day all the way over in NZ.
As I have mentioned before, my passion for trading has lead me to buy and read alot of trading books.
But all that reading cant make up for real trading experience I have learnt.
But I have a question about the stocks your traders trade.
Do they have a select few stocks that they know well and trade in and out of daily, or do they scan the whole market for particular set-ups and then trade those.
If they do have a select few stocks they like, how many would this roughly be?
I understand that this will vary on each individual trader.
Hope you don’t mind the questions from time to time.
Also cant wait for your book to come out!
Kind regards,
SMB Responds
At SMB we hold an AM Meeting before the close to discuss the Stocks In Play, those that will offer the most opportunity. Before that all on our desk share their best trading idea with my partners Steve and GMan, who sift through these ideas highlighting the best set ups. During our AM Meeting we discuss the best stocks, the most important levels, and potential trading scenarios. Before any of that we start our AM Meeting with the Big Picture, and structure of the trading day. Traders then select for themselves the stocks best for them.
During the midday we use the SMB Radar to find other stocks that are moving, or as we say In Play. This is a proprietary filters program built by two of our traders that find moving stocks before our news feeds.
During the day we are all connected via an internal audio feed. If one of our traders sees something moving they announce this and we have yet another idea.
A news feed is piped onto our floor so we do not miss breaking news.
How many stocks you trade depends on your trading style. I might trade only three in a day. GMan might trade 25.
Mike Bellafiore
Author, One Good Trade (Wiley)
2 Comments on “Traders Ask: How Do You Find Your Stocks?”
Bid is always the sell price, Ask is the Buy price. However many stocks can trade on multiple markets at the same time and the spreads can vary depending on the volume of shares traded on a daily basis. You can put in a limit order to purchase a stock at the “bid” price and either you can be filled when the price comes down and that price now is the Ask price ( the bid will still be lower) or you may never see it ticket there, but you could be filled away from the market by crossing orders through multiple traders. The market makers buy stocks and accumulate them hoping to make the difference between the Bid and Ask. only a few cents at a time, but they may trade millions a day and multiple stocks. That is how they make money. That does not include any commissions you pay at any firm. Good luck
Bid is always the sell price, Ask is the Buy price. However many stocks can trade on multiple markets at the same time and the spreads can vary depending on the volume of shares traded on a daily basis. You can put in a limit order to purchase a stock at the “bid” price and either you can be filled when the price comes down and that price now is the Ask price ( the bid will still be lower) or you may never see it ticket there, but you could be filled away from the market by crossing orders through multiple traders. The market makers buy stocks and accumulate them hoping to make the difference between the Bid and Ask. only a few cents at a time, but they may trade millions a day and multiple stocks. That is how they make money. That does not include any commissions you pay at any firm. Good luck