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Paying for Information

While trading you are paying for information. Use this information for future gains. One of our favorite traders used to
claim, “I am getting clipped with commissions. Death by a thousand cuts.” New traders often feel that they are
overtrading. They are frustrated because they perceive they are just churning. However, experienced successful
traders recognize that every trade they make is a chance to gather valuable trading information. Experienced traders
are sensitive to how quickly they were filled and what price they were filled at. They are confident that this information
may not make them money in their current trade, but it will eventually. Paying for information will give them an edge
at some point.

Today one of our Senior Traders (GMAN) and I were trading COST. Admittedly, I was negative after my first 10
trades in COST on the Open. While not thrilled with a negative P&L and continually making losing trades, I noticed
that COST was stronger than the chart was indicating. There was a ton of buying on the way down from 54.50 to
54.16. When I would buy on the bid in front of a repeating buyer and that buyer would drop, it was easy for me to exit
my trade and my exit price was only at most three cents below the repeating bid. For example, I bought COST into a
down move at 54.36 after it failed to break through 54.50. There was a huge buyer on the bid at 54.35. The buyer
was repeating at the same price of 54.35. So I got long in front of this big buyer. However, the big buyer dropped. I
had anticipated that if the big buyer dropped that I would not be able to hit the bid until 54.30 at best. When the buyer
dropped I closed my position at 54.34. Hmmm. I did not expect that. I got a much better exit price than I had
anticipated. And I was quickly filled at 54.34. This stock was much easier for me to exit when the buyer dropped than
I had expected. So I placed that valuable piece of information in the back of my mind. I would use it shortly for a
future and profitable trade.

The stock went down to 54.28 and again I spotted a repeating buyer, a big buyer. So I bought again at 54.29 in front
of the big buyer. I had anticipated that if the buyer dropped the bid this time then I would not be able to exit my trade
until at best 54.18. Again, the buyer dropped, and I hit the bids. I got out at 54.27. Hmmm. I got out at a better price
and much easier than I had expected again. Either I was incredibly fast on the keyboard (which I am) or this stock
was not as weak as it was indicating.

The stock went lower to 54.26 and the buyer stuck the bid there. The buyer would not drop the bid at 54.26. Also,
finally the selling pattern changed. The seller had never lifted an offer into the downmove. Finally, some offers started
to lift. Therefore, since I thought this stock was strong, and the selling pattern had disappeared, I got long. My exit
price if the stock went against me would have been if the bid at 54.26 dropped.
At 9:50, I was negative over $150 and had written 10 tickets. At first glance, a new trader might conclude that I was
having a bad morning. But what I had done is pay about $200 dollars for very valuable information. I now had 2800
shares long from just above 54.26, and I had discovered a very strong stock. The stock went up and I made close to
$800 in the play. Paying the $200 for that information made me money in a future trade.

Learn how to pay for valuable information. Every trade you make will tell you something valuable about your stock.
How easy was it for you to get your stock? How easy was it to exit your trade? If you are able to close your long
position at better prices than you expected and you get fills much faster than you expected, then this is a bullish
signal. Pay attention to this information. And use it to make money.