block is it?

Discussion in 'Trading' started by jimclark, Sep 17, 2007.

  1. What is exactly block trading?

    If I buy and sell 10,000 shares at a time through my retail (IB) I block trading?

  2. 1 trade for 10 thousand shares of one stock is a block.
  3. so am I block trading through my retail broker, sounds like nothing special?
  4. a block is just a nice fat round number indicating size that traditionally only institutions and other big players play
  5. Depends on the price and market cap of the stock
  6. depends on the context: "block trading" in futures is an institutional order that is transacted off the book - ie: not through the market, but rather conducted directly between the two participants who then notify the exchange of the block trade.

    I dont know if a block trade in that context can also be transacted in shares, but block trading is a farcical arrangement that supports croneyism and shouldnt be permitted - its also extremely frustrating when you're waiting for a fill in a market like Euribor to see 20,000 contracts go through on the bid as a block trade and you dont get a single lot.
  7. But what about stocks?
  8. The general definition is 10,000 shares of a medium to large cap stock....10,000 shares of a $5.00 stock, although fitting the definition, is not thought of as a block trade to most traders.

    You have to understand, the average share size of a retail trader is between 100-170 shares (last I checked), so 10,000 shares is generally done by more institutional type, or prop traders.

    But, if you're paying $9.99 or whatever, may as well trade 10K at a time, LOL.

  9. Put it this way if your order is not being shopped around by an institutional broker so both the buy side and the sell side are matched then who cares what size you send to the market or if someone calls it a block.
  10. For me, block trading is a required technique for a stream of capital.

    I consider my position in a stream of capital a block since it meets the definition by its size and my trading strategy, PVT or sector rotation. Both require that I exit or enter according too timing. Timing the markets is a very very high priority for me for making money.

    Also, I feel that my trading should not have an efect on a market because, as I see it, if I were to have an effect, it could only be adverse to me.

    My workaround on this problem is to use market information to allow myself to stay below the radar. I do not do the executions in detail personally.

    When I trade a block, the ratio of buy to sell (long trading) is 20 to 30 approximately.

    I use partial fills to complete the transaction. Their size is determined by the trade sizes going through on the T&S. My instructions to the broker are to trade that size or slightly lower.

    The rate of partial filling is determined by the cummulative volume during that day. A 10% of cummulative volume is maintained as the amount of shares moved by partial fills to get the whole block moved.

    To time the trade, I start the trading on the day the peaking of price will be occurring and when the volume will be high as well. The effect is to trade into the peak across the peak and then finish as the peak has passed. To exit 100,000 shares takes about 4 hours when the total volume of the stock on the peaking day is 1,1 million shares. I have a 100,000 upper limit for trading.

    A good reference is Gary Smith where he notes his best trade of 900K net. His comments are more comprehensive than this note of mine.

    I understand that my posts are difficult to understand. Another blog reference is up where the blogger explains a comment by Faith on why writing like mine is explained by a poor thought process and the inability to express concepts or ideas.

    Here, I am explaining an idea in the context of practice. I'm sure most people will find it a poor expression. That is fine with me. If a person is trading streams of blocks approaching 100,000 shares and the person can leave 200,000 a trade on the table as a consequence of trading limitations, then he will understand the post. Posts like mine which just express personal experience are probably messy simply because the experiences are messy, another proof of a mind that lacks clarity.

    I hope as many people as possible can put me on ignore. I, at this point, have no hesitation to put a person on ignore as soon as I find his comments are in the B category.
    #10     Sep 18, 2007