I've realized that some stocks like INKT, BRCD, and others are now more actively trading and more liquid. They have also recently become decimailized. My question: What implication does decimalization have in making stocks liquid with much better trading patterns even for stock like INKT which are at such a low price. Thanks.
I don't see how you've come to that conclusion. E.g. for BRCD average trading volume has not increased since it started trading in decimals. Tick volume has increased, but that's actually due to the liquidity reducing effect of decimalization. Liquidity is now spread out over six times as many price points making it much more difficult to get even small orders executed at a single price.
Please don't confuse liquidity reduction with liquidity diffusion. The same liquidity is there within the same range, it's just that you get to see people's individual opinions a lot more clearly. More information has both advantages and disadvantages If you were to perform the decimalized equivalent of hitting the best fractional bid, you would need to place your limit 0.10 below the best offer. That's approximately 3/32 (1/16 for the spread, plus 1/32 to reach the bottom-most part of the 1/16 range that would comprise the best bid in a market using fractional prices).
That's correct from a theoretical point of view. However, from a practical point of view it is getting much more difficult to get orders executed due to constant penny frontrunning.
I guess I should restate what I meant. From the standpoint of a visual chart, the volatility of decimalized stocks, at least in appearance,has increased. Whereas prior to decimalization stocks such as INKT at prices lower than from its glory days, now appear to move up and down with more frequency. I was wondering is this could be attributed to decimalization. The same holds for OPWV, RMBS and others, they appear to move more, which perhaps could be a criteria for volume, and liquidity. Please clarify if i've missed the point. Thanks.
I think decimalization on the nas is a mistake. You can't move size at all now. Before, i knew that i could arca for 3k up a teeny and get filled no matter what. Has anyone noticed the mm software that they use to lean on you. Try posting a 5k+ bid. Immediately 500 shares are a cent up..I think it's mm software, and not fast traders. I think the mm's are only looking for like 3-5c just over and over on 500 shares. their software does it automatically. You can't sweep or target an order either. In a fast stock, by the time i've pointed and clicked, the stock has bid i want has moved. Getting 5 fills for 2500 shares really screws with my calculations for profit etc.