Bullets

Hehem,

One does not need a bullet under "normal" circumstances. When a stock is tanking, without a bullet, you would have missed the .50c or .75c move, whereas with a bullet and fast reflexes (i.e., don't think too long) you may only miss .10c or .15c of the move.

You are right tho, they may be overused when a little trading would suffice.

nitro

 

Is it just me, or do bullets prove the futility of the uptick rule? (And that of the SEC in general)

 

Yep.

nitro

 

when trading less liquid NYSE stocks which are very directional (many of them) and you wanna be short, you cannot get in without bullets since it is unlikely that you get an uptick or your ask is taken

 

I know that Echo passes on their exact cost of bullets to the trader with no mark ups. This is due to traders who have bullets will trade more. If a firm does add a little bit of mark up it is insignificant compared to the benefit.

There are so many examples of when to use them. One thing I love to do is be able to completely reverse my position when I am wrong.

I was long and market started to freefall so I send a limit order for twice the position I'm holding to sell just below the bid. I'm filled and the stock continues to tank another .35

There were NO upticks on that entire drop. Retail traders would have only been able to get flat not reverse

Robert

 

With NASDAQ stocks there are ususally many, dozens, of upticks on the way down. Take INTC for example. Today there were probably 50 or 60 uptick opportunities to go short as the stock lost 2.5% in the afternoon. Even when an equity tanks quickly, like NXTL did in the first 45 min this morning, loosing 30%, there were at least 15 upticks. I lost 900 on NXTL today, watched it from the open, but I think it had more to do with my lack of experience and little or nothing to do with the unavailability of bullets. With more experience I know it would have been a major cachingo for me and I can't see where a bullet would have helped me. Could have played it down, could have played it up. I'm just a beginner but I can't see a logical reason to buy bullets. It doesn't seem to follow the KISS principle and adds costs.

 

I was going to argue the case for bullets but instead let me say this: If you have not used them I guess ignorance is bliss. And yes they are useful on Nasdaq stocks as well. Imagine trading the futures waiting for upticks. Imagine trading the QQQs or the spys waiting for upticks.

 

Jem,
The highest quality bliss comes from knowing the truth. Speaking just for myself, I have not learned anything so far about bullets to make me believe that I don't know it. As far as trading the futures and the Q's, what is the point of imagining trading them without bullets? Why waste time dreaming about the possible opportunities there when there are a few thousand other things to trade that do have frequent upticks. Also, I've read a few times that you don't need an uptick to short the Q's. Is that untrue? Sometimes it's hard to tell who knows what they're talking about and who doesn't. Do you need a bullet to short the Q's?
Thx
Rigel

 

First off, the cost of bullets are passed through, yes...but the cost is minimal when you're trying to get short in a hurry.

The market is guarnteed to do two things everyday, go up and go down..and if you limit your trading to buying first, then you eliminate about one half of the opportunities to make money. Nothing fancy, just the way it is. Selling short is going against momentum, and that is generally a bad idea.