Are there any traders here that work for mutual funds or major institutions. I would be interested to hear such a person describe how their trading of stocks for their funds has changed over the last 3 or 4 years. Mainly i'm interested in how they use program trading to do their daily business. The reason i ask is when i was a day trader a 2 or 3 years back the NYSE specialist books were littered with large blocks of stock to buy and sell. And now they are mostly void of any size. So obviously you (mutual fund traders) either aren't moving stock around any more or you are breaking your orders into 500 share lots. Perhaps you have automated your trading and now just use sophisticated trading software to work your oders??
I'd be interested in that as well. I know a guy who is comanager of a mutual fund. I had a discussion with him a while back as to how they could justify paying $.05/share commish when we were paying a tenth of that. His entire answer was that the broker facilitates their trades, and it is worth the nickel to them not to incur even more in slippage. Personally, I think that is bs and they do it to get soft money stuff that ends up coming out of the fund investor instead of their end.
You are wrong. they'd rather get a better fill or better allocation on a 1,000,000 shares / IPO, than getting a few cents off their commissions. You get what you pay for.
First priority for most fund managers and traders is to fill the orders (to get it done). I gotta believe you folks know that buying or selling size (with minimum impact on the market) can take a significant period of time. If enough days go by and the order is not filled, heads roll. If the order on an initial piece is filled quickly, but the price sucks, chances are they will not participate in the follow up orders, and that means they will not make money on the "clean up" order, and again, heads will roll. Its a business. So what would you do, would you worry about commission, or would you want to work with the folks who can get the job done consistently, but you have to pay up a little bit. Again its a business and this is part of the "tug of war" that goes on between the brokerages. Do we pay up x amount for the assurance that the shares will transact in a timely fashion at x price or do we look for the cheapest commission and hope we don't get screwed on the price (and lose our customer)? In my experience, the tide goes one way for a while, then the other. Lefty P.S. By the way, this is why when institutions look to hire a desk trader, they want someone who has a "book" to bring with them.
So VWAP means they tell their broker to buy or sell and they are guaranteed the volume weighted average price. So i guess the topic changes to how do the brokers who get these orders from institutions trade in order to guarantee the VWAP without getting burned??
^^^^^^^ Silk; there has been at least 1 or more leaving tracks on elitetrader.com [ within last 4 or more years.] Wouldnt know if it would help your daytrading???; Don of Bright Bros had an interesting adapation recently. As far as institutions leaving tracks in liquid large caps; , many do more than 500 shares & its still done . Strange how some older wildlife does not use main trail. Thanked that institutional trader on elitetrader.com; perhaps he left visible tracks because like , some give 10% plus to charity, or some top traders give tracks/pattern fragments in interviews.