Market Maker Question from a New Trader

Discussion in 'Order Execution' started by AcoosticAnt, Jan 4, 2007.

  1. Hi,

    I have only been trading for a couple of months now and have come across a few questions that I write down in a book to ask when I come across someone who might know the answer. Unfortunately I do not live in a "big business" metropolis so knowledgable traders are few and far between. I was hoping some of you guys could help me with one question that really bugs me and seems to keep coming up over and over again.

    This question pertains to placing orders on NASDAQ Level II. At times I notice that a huge amount of buying volume comes in at a particular ask price--I am talking about the kind of volume that causes a spike on the chart. This continues to go on for 3-5 minutes and the ask price never raises. My question is if there are these people buying consistently over a 3-5 minute period of time, why do the market makers not raise the ask price? Obviously there is a large buying interest in the stock, so why not get more money on the shares by periodically raising the price (and make me a profit in the process)?
  2. I just wanted to add that in the particular situation I am referring to there are little to no sellers during the huge buying period.
  3. Most likely a reserve/hidden order on the ask side. Seller could have 10k, 50k, 100k sell limit and only display 100 shares.
  4. which is why, among other things, i find that watching level II is next to meaningless

    i watch prints, but level II only tells you what people making the orders want to tell you

    i think much of the reliance on level II is from traders who used it "back in the day" when it was much more meaningful
  5. I have to agree.
    If you need to sell 20000 shares at some low volume, thin stock you´re probably not going to show your hand and let the market drop on 10 cents before you can execute, you´ll chop it into pieces, use reserves, or hidden offers to hide your hand. Same thing happens with the guy who needs to sell 5 million shares for a fund, his job is to execute that huge order with minimun market impact. He is not going to place em on the ask, he won´t show his hand till he is done selling.
  6. Remember that there are two sides to every transaction. If there is tons of buying and the price doesn't move then that means there is tons of selling, too. Someone has to be selling all those shares to the buyers. They are just hiding their size and must be content with the selling price. You don't know how long they have been holding all those shares or what their plan was. They may not care if they sell them for 10 cents more.
  7. I am currently using TradeStation as my brokerage and trading software. What is a good recommendation to see the prints without using Level II? I am paying like 9 dollars a month for the Level II access and I guess I should probably cancel it if it is meaningless. What else can I use if I just want to see prints (price & time)?
  8. Level 2 is still a necesary tool when excecuting your trades. But not for determining market direction for anything else than scalps.
  9. And what about the Nyse open book?
    It is more useful than Level II quotes those are after my opinion just fooling traders? Will it have any importance, by my broker subscription costs $60.
    How many of you are using Nyse open book? Which way you are using information in it?
    Bellow I copied few sentences from advertising about nyse open book.

    NYSE OpenBook is an advanced subscription service ....

    This subscription, provided by the New York Stock Exchange, lets you view the full limit-order book for NYSE securities.

    NYSE OpenBook provides a real-time view of the limit-order book for all NYSE-traded securities, thereby ensuring transparency to the NYSE marketplace.
  10. After the hybrid came into place the NOB lost a lot of value... before it use to display a huge size way into the money for like 10 seconds before executing... you only needed to buy from the ecn's and sell to the NOB to make a quick buck... that ended with the hybrid... now is just as usefull as ARB or NSB...
    #10     Aug 24, 2007