specialists arent that concerned with making money trading the stock.they don't have to be because they are making the spread on every order.they are more like a retail store just do volume at a set spread and rake in the money.thats why they never lose. naz is totally different.not only do you have dozens of mm you also have thousands of traders acting like mm all trying to under cut each other.both ways can be profitable its just different styles.
vhehn, Based on what I read here on ET, specialists are much more proactive then just trading the spread. They will not hesitate to take a position if they know which direction the stock is heading (and they almost always know). But the main point of my post was the locals. Being our direct competition, they seem to be in a much better position to take money off the table then we are. And then again don't you have to deal with (thousands) of traders in NYSE stocks trying to undercut each other? It is less transparent due to absense of Level II screen, does not mean it is not happenning or it is any different then Nasdaq.
reminds me of the argument that hedgers don't try to profit from their trades 'cause they're hedging. Notable exceptions (blowups) not withstanding, it's just not true. Traders "trade around their positions." Specialists trade to make money like any other trader does. His time horizon and his priorities are affected by his edge. He has the additional obligation of being THE buyer or THE seller. In exchange for having to be there, he is granted a franchise in a stock and the privilege of being the market.
And then again don't you have to deal with (thousands) of traders in NYSE stocks trying to undercut each other? It is less transparent due to absense of Level II screen, does not mean it is not happenning or it is any different then Nasdaq. no its different.the specialist is much better able to hold the spread than the naz.he is also able to lock the book and print an order where ever he wants to ensure himself a profit.
I think the consensus answer here is: 1.) The spreads are wider on equally liquid NYSE stocks with their specialist system vs. the Nasdaq market makers. Obviously the regulators need to bust open the NYSE's black box bid-ask spread and make it more transparent and accessible like the Nasdaq system. 2.) The spread is not everything. Trade what makes you money. NYSE stocks are generally maturer and less erratic in their price movement than Nasdaq stocks. There is a time and place for all stocks, sectors etc. .
There are great opportunities in both OTC as well as Listid trading. Its a good idea to know how to play both. I traded otc exclusively for a year , then nyse for a year...now I play both every day, lately there has been some bigger upside moves in some whippier otc stocks. I used to get labeled (when trading prop)as 1 dimentional, only trading OTC, Now I understand better the need to be versatile enough to go where the opportunities are at the time. Just yesterday, I churned 200k NYSE shares for a waste of a day, and after hours whacked OTC on the msft news, enough to make it as great day. They both have advantages and disadvantages, but your development as a equity trader will be enhanced over time by having both skills in your back pocket,,,hell, soon enough you will have a third to focus on SSF. >>>>>>OTL
I agree with your #1. As far as #2 is concerned, even though it is a correct statement it does not really help. The guy is new to trading and wanted an advice whether he has better chances with NYSE or Nasdaq stocks. Telling him to "trade what makes you money" obviously does answer his question. I am sure there is no statistics like 5 out of 100 Nasdaq traders and 7 out of 100 NYSE traders make it so you are better off with NYSE or vice versa. But there are obvious pros and cons to each exchange. The skills required to trade the exchanges are somewhat different. This is what we should be discussing in the thread.
You are right......as the thread gets longer I tend to forget what the original question was about. .
In the end it all comes down to the strategy or strategies you choose to use to trade. For tape reading I think we can all agree, it's alot easier to read the mind of one, the specialist, rather then the mind of many, the market makers. If your trading based on technical analysis purely, then either market will do, but the Nasdaq tends to be more volatile. If you're scalping, either market will also do, but it'd be easier to scalp one or the other. Any opinions?
This doesn't directly apply to Nwbprop's question, but its on the subject of NYSE vs. Nasdaq. I remember when the NYSE specialists were trying to forestall decimalization (unsuccessful) and the opening up of their operation (successful). They said that the then current specialist system was better than the Nasdaq system because it provided for "price improvement". What they didn't tell you was that they would widen the bid-ask spread by say, 50% from what it should be and then offer a 50% price improvement discount. Such a deal! What amazed me was the amount of people who believed Dick Grasso and his ridiculous propaganda. .