Well, I have to admit, this chapter was waaaay the fuck over my head! I thought I’d been around long enough, read enough books, had enough experience etc. But the level of detail Nate goes into on OTC Level 2 and the techniques to get in and out of OTC positions was off the charts. (Ha, get it, off the charts!!)
I’m a 99% Nasdaq trader and when I do trade OTC’s its usually just a overextended short that I cover into a wash. I don’t use Level 2 that much in my decisions. Could be a reason why my exits are frequently so poor even on winning trades….
This chapter is a huge resource if you are an OTC trader or considering getting into OTC’s more. I will probably just shelve this chapter for now. If the OTC market heats back up and I start trading them more the first thing I will do is rewatch this chapter.
Nate covers 3 trades from start to finish with GREAT detail and very patient and clear explanations.
In summary, it sounds like I’m putting down this chapter but that is not my intention, it just focuses on a market that I am not that interested in. I did learn a TON about Level 2 which was nice. Even though I may or may not trade OTC’s in the future I improved my skill set by watching this chapter.
Chapter 6 – OTC Trading
Wait for parabolic move
Level 2 watch bid sizes
Need to get aggressive on fills, when they move they move fast.
Stacking – numerous market makers all at the same price
Need to be one step ahead on orders in OTC, you can be right but never get filled.
I still struggle with getting a “feel” for Level 2, but Nate does a very good job explaining what he is seeing.
Bid and Offer “locking”
Lock in some profits before the turn back up. And cover into panic, turns are quick.
“Uptick on air”
Watch for large volume getting absorbed, this could indicate a reversal.
Once you get the big crack and bottoming, good risk to reward to buy with the LOD as risk.
Overextended chart, often stair step type in OTC, then speed up’s.
Good explanation of walking up a chart to do a deal, then once deal is closed, insiders could care less what happens to the price short term.
Hidden buyers – Level 2 size looks small, but time and sales show all kinds of volume on the Bid.
Good explanation of psychology of dip buys and what it takes to spook them.
Very useful watching and hearing how Nate thinks about exits on this trade.
Nice explanation of how to play Q’s in OTC
Need to have ROCK SOLID plan in these.
How do big Orders on L2 move the price.
Long dips, sell rips
Emotional games on L2
More examples of bouncing on air.
Thin vs thick market