This post is essentially the next step in developing our trader education when it to comes using the information we get from bids, asks and executions. If you have not read the post on Level 2 Quotes – I suggest reading that first, it can be found here: Level 2 Quotes
Time & Sales
The example below is a time & sales box. This shows us each trade made on a given stock along with the price, time, size and exchange it was made on. Unlike the level 2 where a bidder or seller can enter a large order only to remove it, anything we see in the time & sales box is an actual executed trade.
Looking at the first line we see there was a trade made at 15:27:37 (or 3:27pm) at a price of 34.9075 for 100 shares on the Nasdaq exchange. The inside bid/ask was 34.90 X 34.91 and the transaction line is shown in a white colored font.
We need to take notice of that because the color of the line tells us if the trade was made on the bid, the ask or in between. For our example it was made in between the bid and ask hence the white line. If it was a buyer hitting the ask then it would be a green line as seen in the fourth transaction down. Red is a seller who hit the bid.
This is useful because it’s another piece of information that let’s us know if the buyers or sellers are in control. Looking back at our example we see a whole lot of red as sellers were likely in control of this stock at 34.90. Then we see our first transaction of indecision (sixth line from the top) and then the buyers try to make a move only to see things fall back to indecision in the last three transactions.
Another important piece of information we get from time & sales is to see if a real buyer or seller exists. Let’s say you see a bid for 100 shares at 34.90 on the NSDQ. Then in the time and sales you see 100 shares bought at 34.90 on NSDQ, then another and another and it continues on even though 1,000 shares have been purchased, yet that same 100 share 34.90 NSDQ bid is still there.
That is what’s called refreshing. A big buyer (usually an institution) has a large order to fill but does not want to show its hand in fear of pushing the price up from a big order showing on the level 2. So they sit on the bid with 100 shares and just keep filling orders.
This is good information for us because that buyer has now put some support into the stock at 34.90 and if the stock does finally push below 34.90 it’s a good indication it’s time to get out of dodge if we are long the stock.
Time & Sales is just one of the many tools needed to make money trading. If you are a new trader trying to learn how to make money trading stocks the Active Trading Blueprint is your A to Z guide, learn more here: Active Trading Blueprint
Always Remember – “Victory Loves Preparation”