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Date: Wed, 25 Mar 1998 04:27:23 -0400
From: "A.J. Carisse" <carisse@xxxxxxxxxxx>
To: Omega List <omega-list@xxxxxxxxxx>
Subject: Re: Day Trading by Bob Kodama
Message-ID: <3518BFEA.73A06F51@xxxxxxxxxxx>
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Ron2368 wrote:
> Bob,
>
> Since the otc is entirely computerized
> for trades the Level II screen will show every bid/ask on a particular stock
> by every broker that makes its market. From what I know the "Soes Bandits"
use
> this info mostly , but if you are looking for an edge on large share lots do
> you think this would help?
A.J. Carisse wrote:
>If you trade the NASDAQ, Level II is very helpful. Even more important,
though,
>is having a good execution system. Forget online brokers here - not only are
they
>slow and unreliable, but they are selling your order flow, whereby you won't
get
>good fills a lot of the time. In fact, this is how most of these brokers
make
>their money - losing on the commission, but more than making up for it here.
If
>you average a trade or more a day, definitely consider getting one of the
good
>execution packages, which level the playing field between you and other MM's.
>Personally, I'd recommend CyberTrader (http://www.cyber-corp.com) - no
>connection
>with them, but it has it all as far as these things go, including
capabilities for
>trading listed stocks, and I've heard nothing but good things about it.
A.J.,
Could you give me a specific example how the Online broker sell this
order flow and how it affect me ? I do a lot of NASDAQ trades and use online
brokers. 95% of my orders are limit order. I am reasonably happy with the
executions. My only complain is that they don't show my Bid or Offer when
it's better.
I have considered getting Level II, and CyberTrader, and MB Brokerage,
but so far I failed to justify the added cost and how it would benefit me with
my system and style of trading. My understanding now is that if I had 3k
shares to sell at the best MM Bid price, my broker would sell to all MM with
that Bid. I can understand that he might go to his MM friend first who might
only take 100 shares and tip off other MM to drop their Bid, whereas Level II
would allow me to hit the MM who is Bidding 7k at that price. I have never
had a "formal, official" explanation of the mechanic involved in the order
flow.
I would be happy to discuss this subject farther with you if you have
more experience in this matter. My experience( 28 yrs) in the markets have
forced me to be to very cynical of what I see. This has served me very well
in the markets. In fact, the system that I trade is predicated on reading the
"true picture" of the tape.
I pick a technically good looking stock then I "read the tape" by watching
them maniputed the Bid, Ask, and size. I do just the OPPOSITE of what THEY
are trying to tell me !!!! It works !!!!! My backup system is working with
patterns.
Even though I am a cynic when it comes to the competition for economic
gain, on the contrary, I am a very nice person when I am off the "trading
arena". In fact, my first desire out of college was to join the Peace Corp,
but at $75/ mth I could hardly help myself. I thought the markets might be a
better place to achieve that goal. My heros are all the voluntary workers of
the world and the "Mother Theresa"s. These people( including some people on
this Omega list) restore my faith in humanity, and some of vendors are
destroying that.
I learned this from Linda Rashke's book:
When you are exiting with a loss, tell yourself your are not exiting, but
rather
just TRADING FOR A BETTER PRICE !!!! If you like it so much, you can
always get back in for the price of a commission and slippage. In most
cases,
it'll be cheaper then hanging on.
Thanks in advance for any feedback.
Jim C. Wong
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