I recently started working for a firm that offers rebates to their traders. Most of the income comes from these rebates. But so far I dont seem to have a grasp at this volume trading. I mainly just trade stocks like ericy, palm, and jdsu going long and short. I was wondering if any other traders can give me any pointers or advice on this type of trading. Maybe what stocks they trade and how they trade them? Thanks....any advice would help.
I had a visit from Harvey Houtkin (prior All-Tech, now Domestic Securities and Attain ECN), and he was demonstrating the "rebate for liquidity" game in my office. I actually saw him trade severall hundred thousand shares in a couple of hours, buying on the bid, and selling on the offer. Although this type of trading seems "counter intuitive" to me, it can make sense when you are receiving liquidity rebates. All you need do is trade at a break even rate and receive a few tenths of a penny per share. I'll be exploring this further, it may actually be a benefit to some traders. We'll see... Don
Yeah, I know...they were even doing some automation (got themselves in some trouble with it)....It seems like a lot of work, entering hundreds of thousands of shares to make a few hundred dollars a day, with the risk being market movement against you ....especially since you're obviously going against momentum....but like I said, this may be of value to some traders.... Don
You can get just nailed doing this...I have. THink about taking 50,000 shares for a 2 cent loss in 2 minutes. Worldcom is gone. Palm and ericy are poor replacements for them. Watch yourself. they dont have nearly enough volume to make it lucrative.
Hey Don, did you just wake up from a coma ? Harvey Houtkin pays you a visit and all of a sudden you think liquidity trading might work. Excuse me while I LMFAO!!! Traders at your firm can forget it. Your commissions are way to high. You need bare bones commissions to play that game, in fact the guys at Swifttrade pay ZERO commissions. That's what makes the liquidity trading model work. Don't mean to slam you dude, but you have been the last bastion and defender of high commissions forever. Anyone who follows your posts knows that you are always quick to point out how traders who pay higher commissions at firms like yours receive better service, better financial stability (firm stability), etc. . You have maintained that commissions have to remain high in order to cover clearing, software, and all those 'other' costs that make up commissions. How could you possibly think this would be a profitable strategy for traders in your offices? Maybe this is the contrarian indicator for the liquidity trading strategy... when guys like you start thinking that it might be a viable way to trade, can the end be far off? One thing I will say for liquidity trading is that it has pulled the curtain back al little on the 'Commission Wizard'. It has given traders a little glimpse into the greasy world of commissions and once the genie is out of the bottle there will be no going back! MACD
A few things about Swifttrade...First, I'm not sure what office you were in but they have about 30 traders at their downtown office that holds about 200.... You might better take another walk through...Secondly, ZERO commissions!! Maybe for their proprietary division where you make 20 dollars a day salary and split the profits 50/50 if that...as a retail trader you start out at .10 a share....and can work as low as .01 if you trade something like 10,000,000 shares.... before you start hyping one of the worst firms out there you might dig a little deeper..... and for those bitching about .01 being too expensive, I have a funny feeling you've never made a dime trading ..... nevertheless cheer up my friend, someday you'll be able to start trading when trades are free...so hang in there... cheerios!
I don't know anything about swift,but if you are paying .10 per share (ten cents!) your getting F^%$@*&^ screwed! I hope you mean a penny per share. As for people bitching about too expensive.....when you bought your car did you pay sticker? I hope not. Your trading should be run as a business......MINIMIZE YOUR EXPENSES! I trade at .00075 thats right , seventy-five cents per 1000 shares (although I do trade about 40 million shares a month). Imagine paying even .005 on that! FYI $200,000 vs $30,000 Please....When you understand what your talking about add your 2 cents I like Captain Crunch!