How Stock Market Algorithms Create MASSIVE Opportunity in the Right Stocks

It’s really unbelievable how much is going on at the same time, but unbelievable in a way. This happens every quarter. This is amazing. If you’re navigating this now, taking notes, understanding what’s going on, seeing what gdp, inflation, and how these things all play together. Ev every four months we have this opportunity.

It’s amazing. On top of the normal market trading. So these pockets of opportunity of earnings. Look at this. This is what a market we are in right now. This is fascinating. I hope I’m conveying my excitement for the opportunity that’s unfolding in front of us right now. Because of the way that the market’s trading right now with algorithms in the market and the speed of information, I’m not sure we’ve ever seen this much clean volatility every day.

Like again, going back to some of these stocks, I’m going to go to Afrm because I’m going to keep harping on this one example. 45% moves in four days. And what I mean by the algorithms, and you can see the size of some of these energy candlesticks here in both directions. When the market makers and specialists were physically placing these orders, and this I know for a fact because I had, one of my best friends was a market maker at first Boston.

I had an entire room full of New York stock exchange specialists and floor clerks and brokers on my trading floor in New York City. This, I can tell you for a fact, their job was to create a fair and orderly market. So we would see these kind of moves, but it would take a month, not four days. So what’s going on now?

Which is what’s making two things, three things really, and that’s so glorious in the market right now. And I want to really convey the opportunity that we have right now. Number one is the speed with which information is transitioning right now, where I could tell you for a fact 20 years ago. That the information we could get in a tweet right now was like a three sheet piece of paper that got handed around hedge funds and on the floor of the New York Stock Exchange, and we wouldn’t find that information out as fast as we do right now.

It’s to the second number two, because algorithms are now still filling all of that order flow as opposed to the specialist doing it. It’s still being done. It’s just being done in hundred share increments, one after another. They’re all programmed for the same thing. So once certain levels of price, action and volume get hit, they’re all piling on top of each other, which is creating these glorious price action moves that are short and violent.

And then when you’re caught on the wrong side of this thing, it goes on for three days. And if you’re on the wrong side, I’m going to get to the next point. If you’re on the right side. You’re making your entire week, even if it’s just in one stock. Which brings me to the next massive difference now compared to back in the day.

I’m going to sound like a 90 year old man right now. Back in the day, we had to trade by sending Ravens between the floor of the New York Stock Exchange and uptown New York City. I don’t want to sound like that guy, but back in the day, even as a prop trader, we were trading with. $65 per one side of the trade.

And that was trading for a firm that was the prop firm. So every trade was 125 to a $130 roundtrip. And that was the, you still had, you had to factor in the trade cost into managing the trade. Because you had to make an eighth on the trade just to break even. Nevermind make money, which brings me into the glory of all of this, that we are practically trading for all intents and purposes.

We are trading practically commission free right now, and especially when you add the fact that you can get paid to place orders on ECNs. And if you don’t know what that means I’ll just explain this to you just in one really big second because this is the big deal that I want.

So let’s say that you’re placing an order on what is known as the aca e ecn. There’s also the BATS ecn, there’s also the Edge X ecn, right? These are all different electronic communication networks. So ECM stands for electronic communication. So if I place an order, I bid for a thousand shares and get filled.

And it could also be offered as well, right? It could be either one. It’s a bid or offer. So I’m basically advertising, right? If I advertise for this, let me just put this in there. If I advertise on the bid or advertise on the offer for a thousand shares, depending on which one of these ECNs, you can get paid $2 and 50 cents.

Per thousand shares. So again, this might not sound like a lot of money, but if you trade 10,000 shares during the day, which is really not a lot of trading at all, that turns into $25. That’s going into your bank account times 20, trading days, that’s $500 in rebates you got for trading.

So that comes directly off of the commissions you paid. That’s not hard to do. It’s literally you’re just advertising to buy or sell and you’re getting filled at limit orders. So when you factor all of this in, there’s no reason in the world to take a big loss on a position because it really costs nothing to get out and nothing to get in Again, nothing in parenthesis.

I want to be clear about that. It’s not literally nothing, although it can be if you’re really missed or this. So the point that I want to get across is the. The world that we’re living in right now. It’s amazing. I’m speechless about how amazing it is right now because the way that we look at things, the way that our community is evolving, the way the market is available right now at 24 7, access to all of this stuff.

And the algo is helping us when we’re on the right side of a trade and I’m, look, this is a $20 stock. I’m not talking, I’m not holding Google up on the screen right now at $2,000 or Tesla at $800. It’s a $24 stock. Look at the size and some of these energy candlesticks, okay? You owe it to yourself right now.

To say this is I, there’s no way in the world a year from now you want to say to yourself, wow, I really should have just applied myself a little bit more. Maybe put an extra 30 minutes a day into really learning this craft, because this is just absolutely amazing. Which again, takes us back into the whole point that I brought up about the markets this week, and we kept harping on it over and over again about tight, nothing going on.

A little bit of a move to the downside, but pretty much not light volume and then you pay attention. Don’t blow your account up because you’re bored and you get these kind of moves. Man, it is an exciting time to be involved in the markets and I’m really, honestly, I’m grateful for the people that we’ve attracted into our community because we have people that really want to learn, people that like spending time with each other, people that take this seriously.

And it’s just, I’m just so grateful for the people that we have attracted here, and I’m happy to be the person leading the pack, giving my experience to help everybody really take advantage of all of this kind of stuff. And I really just want to, if I have to shake you out of your shoes, to really bring home this opportunity that we have right now as active self-directed traders.

Man, I hope I just really explained to you how special this opportunity is right now. Both what the market’s offering, the way that we look at the markets, and the way that our community collaborates together in the successful pursuit of this. It’s a pretty darn amazing time to be an active trader.

And I’m just going to say it without sounding egotistical, but I think that we have the most amazing community out there. And I think we’ve attracted and we continue to attract the right people. So I hope so. Conversation around what’s going on really opens your eyes in a bigger way to the opportunity that we have right now.

And I think it’s going to stay this way. It’s a global market. The algos do 75% of the volume on the exchanges and our process of not fighting it, determining how much order flow is obvious. Reading the tape to know when it changed and working on if it’s still valid or if it changed. And then working on optimal entries and using the profit maximizer.

Man, we’re in really good shape here as a community, and I hope you could tell how excited I am about it for all of those reasons. But I will tell you, like I said, it took me 10 years to make the decision to want to do this again. And I’m very happy that we did, because this is just.

Waking up every day and spending my time with all of you makes me get jazzed up every single day. So I hope you can feel the passion and excitement that I have the way the markets are right now. And you feel that and run with it to whatever degree you’re able to.