Are MM's quotes computer driven?

Discussion in 'Order Execution' started by wabrew, Feb 10, 2006.

  1. wabrew


    Today I think I confirmed my earlier suspicions that we are trading against a computer - not a person.

    Late in the day I entered an order to sell 200 RMCF at 14.80. Level 2 showed best bid ARCAEX 300 @ 14.68 - ask ARCAEX 300 @ 14.83. Immediately, I mean immediately, after my 14.80 offer showed (literally 1 second after I hit the enyter key) a split second later the ARCAEX offer of 300 went to 14.79.

    To test my theory, and since I was starting a scale out, I waited about two minutes and cancelled my offer. No trade took place in this two min period. You guessed it. He went back up to 14.83 offer. I do not remember if his raise to .83 was immediate.

    The stock traded a few shares a few min later at 14.83/ .85 / .85 then 14.90 and was still offered at .90. I reentered my sell at 14.89 (thought I was screwing with a person, not a computer) and sure enough the ARCAEX offer went to 14.88, JUST AFTER IT PRINTED 1900 AT 14.91. (the 19.91 print occurred as I was entering my .89 offer.) 20 seconds later somebody took the .88 / .89 (me) and .90 &.91 offers.

    See atttached T & S from the 14.85 prints through EOD.

    No person could have under offered me that fast ( literally a split second on both entries). SO...... How do they do it?
  2. It's called a relative order. you can do (almost) the same thing yourself with IB. Nothing unique about this.
  3. wabrew


    Thanks - a new on on me. I will rethink my order entry methods. :)
  4. I was having fun today messing with the computers on one NASDAQ stock. Every time I'd throw some size on the offer they would pull off the bid and then as soon as I pulled my offer they jumped back on again.

    It's fun when you don't have a position; extremely annoying when they're trading against you.
  5. wabrew


    That happened to me on RMCF a couple of weeks ago. It usually has a bid/ask spread of .15-.20. When the spread closed to .08 or .09 and I entered a sell order at offer, the bid disappeared. That time the stock sold off so I did not get filled. Maybe I need to rethink trading these thin stocks!
  6. FredBloggs

    FredBloggs Guest

    well it seems youve found a way to engineer better prices if you need to get out at market.

    you think it would work? what size do they show?
  7. wabrew


    Maybe not, at least not on this stock. Two weeks ago when I tried to sell, the stock was acting poorly. I would have been better off just hitting the bid because after I offered at their offer they pulled their bid (On this stock, size is usually about 500X500.

    Today, when the stock was under accumulation, my offer/ pulling of offer / and reoffering higher was successful cause the stock was strong, not because I engineered a better bid.

    I am still amazed at how bid/offers come and go and I learn something new every day.