NYSE openbook traders

Discussion in 'Order Execution' started by cornholetrading, Oct 24, 2002.

  1. I have a question for those traders that are currently using openbook. I have found it useful so far but I am still trying to figure out how to best use it. Anyway the question I have is that sometimes I see the specialist in certain stocks put some size on the bid or offer (sometimes large, sometimes not very much) but that size does not show up in the book all the time. I had assumed if he posted a bid or offer that it would have to be on his book thus showing up in openbook. Does that mean he is flashing BS size or is there another reason why it does not show up in the book? I am guessing if he puts it there if you are fast you can NX him before he cancels his size.

    If anyone else would like to discuss openbook and has some good ideas on how to use it and want to exchange observations feel free to post here. You can also PM me if you feel you are giving a secret away posting it in the forum.
  2. could be representing somebody from the crowd, or if it's small, then probably his own account.
  3. tntneo

    tntneo Moderator

    you can't really know when the specialist shows an order. your comment is a speculation not a fact.
    also, if you look at the best bid/ask you may see displays outside NYSE (ecn, other exchanges).
    if the best bid/ask does not come from NYSE, you won't see it in the open book.

  4. not really sure what you mean by it being 'speculation.' if the closest bid on open book is 10 cents below the bid, then it is either his own account he is trading for, or someone in the crowd. it's obviously not an off the floor trader, otherwise it would be on the book. if it's a large bid, it's likely a customer in the crowd. if it's small, then he is probably making a market, trading out of his own account.
  5. tntneo

    tntneo Moderator

    if you are only talking about the quotes from NYSE itself, OK maybe. I am talking about the consolidated quotes countrywide.

    I wanted to caution that the best bid on IBM might come from island or instinet, it's an example. this bid won't be in the open book.
    if you look at the market quoted only by NYSE, it's another story.

  6. I look at a Level 2 display so the quote I was talking about was from NYSE. Thanks for your help. So if this is the case with it being a specialist order or an order on the floor do you see it more prone to being fake or flashed as size to make it look weak or strong then canceled. I came up with this thread because on a stock I was trading I kept seeing size of 100 and 900 being shown on the offer, not in the open book, and as soon as it started to get hit a litte the rest of the order was canceled.
  7. Cornhole.......
    Its a crapshoot. I usually play the size regardless if it is on the book. If it is crap or cancelled....thats the risk we take. When MU was trading he always had size that was not on his book. Most often it was legit.
  8. tntneo

    tntneo Moderator

    big size is almost always deceptive.
    sometimes it's not.
    but imo trades matter more. in that sense the book is hardly the most important tool (that's the topic with this thread). It is useful if the rate of trades is not quicker than the rate of refresh (10 sec). not that you need one trade max per 10 sec, but if the spread and sizes change much faster than 10 sec then it is useless imho (for big caps high volume, that's what I think).

    tape reading I think is more important.
    but it's a sprectrum of tools you need. imo the composite picture from price distribution (S/R), tape reading and open book (when applicable) are the tools as a package you need.
    some add more indicators, breadth indicators or sector indicators, it depends on your trading plan I suppose. but the more info, the more difficult to get a consensus and act in a timely fashion imo. less is better.

  9. I trade off the size, when a large bid or offer come on the book, it usually causes a reaction, I try to capitalize on that on the one stock I'm presently trading.

    It doesn't always move away from the size obviously, and at times its gets filled like nothing, but traders are definitely trading off of it, so it behooves you to stay on top of it.
  10. I have noticed that it works better (openbook) later in the day for trading between large offers and bids. Of course the validity of the size would depend on overall market conditions too. However I don't get much out of openbook in the morning, but maybe that is because like someone said earlier that the pace of trading is too quick for the 10 sec updates.

    Big_jdez are you trading large cap stocks?
    #10     Oct 24, 2002