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PureBytes Links
Trading Reference Links
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Just to add to Patrick' s description of SOES, there are other systems in
places as well as SOES for daytraders and MM's or market makers to utilize
such as
Instinet, The Island, SelectNet, and Bloomberg Trade Book where trader and
market makers can place buy or sell orders. The advantage to these private
systems is that
fewer people have access to these systems limited to market making brokerage
firms, daytrading firms, and other institutional traders like money managers,
etc.....
Here traders can buy or sell between the spread and often trade at a discount
to current market prices. In recent years firms like Datek Securities offer
limited access to these ECN' a s they are often called. These Electronic
Communications Networks
offer price transparency to the market giving a trader more choices as to how
and where to place a trade, also they give access to afterhours trading, which
most investors do not have access too. Their are a lot of amatuers at firms
like Datek that
place buy or sell orders and then the market price moves up on their stock
while their trade is sitting their for sale at lower price, traders with
access to ECN's
gobble up their shares at a discount and resell the at higher price before the
trader can cancel their order. For instance if DELL Computer has a bid and
ask of
lets just say bidding $85 and asking $85 3/4 A trader might see trades in
between these two prices with some amatuer selling their DELL stock bidding
$84 7/8. If they fail to cancel the sell order then someone can buy that stock
using an ECN at
$84 7/8 and turn right around and sell at $85 or higher since most daytraders
trade between the spreads when possible. So if someone can pick up 1000 shares
of DELL and instantly profit 1/8 of a point or more, on 1000 shares a 1/8 gain
equals
$125 profit. Competition is fierce for such trades, but this is just one
example of the advantages daytraders and market makers have over 95 % of
investors
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