I have no problem with anyone pennying me on limit orders - that is that nature of the game. I DO have a problem with a Specialist doing it, since he has a much more inside view of the market than I do, and his # 1 job is supposed to be a "stabilizer of the marketplace for the given equity". A Specialist is nothing more than a Day Trader, with a profit motive (such as myself). He should not be able to have an advantage over me. Give me that advantage, and my profits will soar by 50%, no question. I don't understand your argument about selling market and getting price improvement. Whenever I buy/sell market on illiquids, I invariably get a market price, with no price improvement. I'm not sure I follow you on that one. Thanks for your comments
He means that you get a better price than your posted LIMIT order price. This is what price improvement means.
Well it's a given that the specialist is a scumbag. Not even a day trader, because no specialist would ever be able to make a penny trying to trade against someone who controls the price. And the last thing they do is provide a "fair and orderly market". But price improvement is good. A stock is shooting up and you get in, then place a limit order 8 cents away. Then it spreads and prints and now instead of 8 cents you make 20. Whats wrong with that? In Naz, you would get your 8 cents and thats it, regardless of how high the buyer paid up.
True, but price improvement works against you almost as much as it does for you so everything evens out. The person covering a short position in your scenario gets screwed.
Another needed improvement is real-time (as opposed to 10-second delay) NYSE Open Book. If OB was real-time, I'd be more inclined to buy/sell market, and less inclined to place limit orders. When market orders are placed on the book, opposite to my position, I'd be able to trade market more. I really believe that NYSE imposed this delay to discourage this, rather than for technological reasons.
I'm not sure that being able to see the real time size in the book would be a *lot* more helpful. Especially in thicker, large caps, when the market begins to move in the opposite direction .... POW ... in the next refresh of the book, the orders are all stacked up crossing the market. There have been lots of times when I've seen size on the offer, sometimes decent size, and my limit against it or a penny or more through it (heck, even NX'ing it) yields only my limit as the new bid or below the NBBO. Yes, clearly I'm too late to the party, but sometimes I'm chasing to price to cover a partial fill or the remainder of my position, getting too greedy and holding out for a better exit. This is especially true in the higher priced, more volatile stocks. So, I guess this is a long way of saying that even if I could see the NYOB in realtime, I suspect that my limit order which crosses the market by 3 cents will not be any more likely to be filled....I'll just be more frustrated because I've seen the size and felt like I should have been entitled....
Dave, Yes, I agree. I trade mostly illiquids though, so real-time OB might benefit me considerably. Very hard for me to believe that the biggest exchange in the world, doesn't have the network capacity or throughput to handle the OB real-time. I think they should be investing some of those billions in profits on infrastructure, perhaps.