With the reliance on computer programs these days, and the talk of getting rid of the specialists all together, I have a question: How often does the specialist really impact a trade these days? Are there algorithms running that anticipate trade strategies now, rather than a person? Sometimes is seems that certain stocks have a specialist with a particular personality, but then I do not see how one person could possible handle all the required complex responses to so many trades. Sorry for the clumsy question. I am trying to understand my relation to the entity on the other side of the screen... m_L
that is actually a great question..in my opinion,the specialist could manipulate a stock by holding buy orders until stops were taken out ect... the less involved a floor trader is,the better traders are off..imo....
The spec can't see the stops nor he can he hold buy orders, except when an LRP is triggered. Only after an extreme instantaneous price move does the specialist come in, and then his job is just to match incoming sell orders (from the floor, the outside, and his own inventory) with the large buy order that triggered the LRP (and vica-versa with large sell orders). Other than that, the specialist is just a prop trader trying to make a few grand per day.
This is interesting. So, is he making the money for the firm he works for, (and who is the firm he works for?). In the book by Christopher A. Farrell, he describes more specific manipulations by the specialist. I think I saw this the other day, (not on a trade where I lost money), but I saw the pattern Farrell described. But I realize that Farrell is writing from a year 2000 perspective, and that there must be algorithms and other systems in place in 2007. How do you think trading will be impacted by the loss of the specialist, when they switch to all electronic? Thanks, m_L