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Please pardon the unsolicited input. I wanted to comment that much
talk about NASDAQ trading seems to imply that if you put out an order,
you will get filled (I'm not picking up the partial fill issue -- I'm
talking about getting anything off at your price when you really need
to). If that were true, then the hype about the business might be
justified. Unfortunately, the fills can be miles away from where you
began entering you order because quotes vaporize.
My experience with Selectnet was that if the stock began falling away
and I wanted to sell, the preferenced MM just watched me lower my
offers as the market makers lowered their bids. It happens in
seconds. Selectnet is voluntary fill and if there is anything to the
suspicion that MM's at times back away from their quotes in symphony
(and their is), they will certainly ignore your Selectnet offer if it
suits them (there's nothing wrong with that, in principal). Unless
you're a subscriber, you can't see the Selectnet book. They might
ignore your offer because you're an unknown or worse, a daytrading
firm -- they know who's who -- and fill a member of the tribe. And
dispense with the notion that they'll take stock from anyone who's
cheapest. Not always true. There's a "favor account" in the business
and they take care of one another. After all, I'm told their is honor
among thieves. (My apologies to the honest market maker, wherever he
or she is). This one of the disadvantages of a dealer market vs. an
auction market, IMHO (especially when the dealers all belong to the
same club and that club enforces the rules -- again, IMHO).
I traded as an employee and at that time SOES was not open to us, but
if I could have used it I would have to hit the bid one or two levels
down from me (20% below the bid or above the offer was the limit at
the time). That is a terrific idea and as it gains popularity I
suspect it will lose effectiveness. It would have been cheaper. As
it was, Selectnet rejects (preferenced or otherwise) were a common
experience for me in the times when I wanted to bail out. Don't
forget the $0.0175 per share SNET fee.
Actually, my best hurried exits (and I really relied on this as my
safety feature because I couldn't use SOES) was to have an Island
fill-or-kill order all queued up and ready. If I were long, I'd be
watching for ISLD to pop up on the bid side and I'd blast him ASAP.
Because ILSD fill-or-kill (at least on our TradeCast sytem)is
ectronically matched, I'd get an instantaneous fill unless someone
beat me to it. That didn't seem to happen too much, though it did
happen. If the fill was partial, as it often was, I'd repeat until I
was satisfied with my position.
Happy swimming in shark pools,
CW
---Timothy Morge <tmorge@xxxxxxxxxxxxxxx> wrote:
>
> Brandon:
>
> This sounds fascinating. I would love to watch someone daytrade
using level II.
> Your advice to go to the next order below the current is a great
> technique--meaning, I want out, get me out. The difference in going
to that next
> order is meaningless if it means you are out. That's like looking at
the screen
> when day trading SPs or Bonds after a surprise and seeing a position
running
> against you. Many traders sit, hoping the market won't hit their
stops [some
> even cancel their stops, hoping the market will turn back their
way]. I find the
> moment when you feel the market has moved against you, in an
unexpected fashion,
> do what you have to do to get out. Somehow, if you wait for prices
to get
> better, they never seem to. So, as you pointed out, if you want to
get out, make
> sure you are out. Then you can concentrate on the next trade.
>
> Thanks for the fascinating insight in Level II...I'll have to find a
way to see
> Level II traded.
>
> Best,
>
> Tim Morge
>
> brandont wrote:
> >
> > I use the ECNs and SelectNet all day long. I primarily use Island.
> >
> > It has been my experience that orders that are only partially
filled remain
> > open orders, allowing the remaining shares to be fill when the
market comes
> > back to your price.
> >
> > The only exception to this is when you are buying on the offer, or
selling
> > on the ask. In such cases the ECNs will match your order with
anyone on
> > there book willing to take the other side of your trade at the
same price.
> > But only up to the number of shares being bid or offered.
> >
> > In fast moving markets, and in volatile stock (i.e DELL, MSFT,
NCSP) if you
> > find yourself on the wrong side of the market the best bet is the
SelectNet
> > (USING THE PREFERENCE OPTION, NOT BROADCAST) one of the Market
Makers a
> > 1/16th away from the prevailing bid/offer. It will cost you
$62.50/1000
> > shares in slippage, however that is typically better than
reentering order
> > as a stock moves against you 2-3 points in 2 minutes.
> >
> > One other tip- The large Market Makers such as GSCO, MLCO, SHWD,
MASH, NITE,
> > PWJC, will typical except an order 2-3 times what the are showing,
as long
> > as you get to them early. Don't wait till they are the last one
the
> > bid/ask!!!
> >
> > Hope this helps in some small way,
> >
> > Brandon
>
>
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