ECN Arbitrage and SOES Bandits

Discussion in 'Trading' started by huby, May 16, 2001.

  1. huby


    Hi everybody.

    Today I bought 200 shares of JNPR at 55.83 on island. I was just doing my usual thing, trying to see if a new high would be made after breaking through the previous one, when I noticed a bid for JNPR on BRUT for 56.2. Just for fun, I immidiately hit the bid. I made a whopping $70! Not much dough, but the cool thing was that it only took about 10 seconds to buy it and then resell it! (If I were Wade Cook I would print in my next book that I can make $25,200 an hour.....hehe).

    I was just wondering if others try to take advantage of this occasional arbitrage opportunity that exists on ecn's as a regular trading style.

    The days of the SOES bandits are long gone once the market makers wised up to daytraders tricks. Arbitrage opportunities like mine today obviously still exist, I'm just wondering if anyone else has tried to make a living off of this strategy? I found a link from the that was kind of interesting. Anyone have any thoughts on this?
  2. Basically you're talking about scalping. The example you mentioned is fine, but I bet that the BRUT bid was only for a few hundred shares or so. As you can see, your profit was not very substantial, so in order to really make it worth your while for that kind of effort, you'd need to be trading 1000 share lots or larger. At that point comes the problem of finding bids that can absorb large share blocks, and ones that get you out with a profit on the whole share lot.