problems with SOES

Discussion in 'Trading' started by Atlantic, Aug 8, 2001.

  1. Atlantic


    since "SuperSOES" is here - i have the following problem:

    i trade with IB and always routed my orders to "NASDAQ" - as we know, those orders are now "SOES"-executed.

    before SuperSOES, my NASDAQ-orders always worked very well. very fast fills - (almost) no problems with shorts, etc.

    but since SuperSOES i have huge problems to even get a fill on my NASDAQ-orders. whether my orders won't get filled at all - or i put my short exactly on the uptick-bid (like it always worked very well til SuperSOES came) and it won't get executed - or it's for example just impossible to cover a short - all in all i get very much more rejections than fills. as we know, there are no bid/ask - quotes on SOES.

    so i wonder, what would be the best way now to route my order. IB told me, that bid/ask on SOES should be the same as NASDAQ - but in fact they are not. i tried it by put the SOES-line of a certain stock right below the NASDAQ-line and then click on the field where the bid or ask should be - to get an order-line - and that order line always showed a different price than NASDAQ did - so what?

    does anybody of you have the same problems - what could be a solution to this?

  2. Atlantic


    what about IB's BEST or BEST_ECN - who of you does them use for most of the trades? are they reliable and fast enough?
  3. roger2



    i have been using IB's BEST_ECN exclusively and it works pretty well, i short mostly but i never even pay attention to upticks

    i just read on another thread here at ET that some traders are experiencing slight delays with BEST_ECN orders going live, and that they do not have that problem when routing to ISLD. since most of my BEST_ECN orders go to ISLD anyway, i will probably follow their lead and try routing to ISLD

    regarding the 'BEST' routing, i think it is possible for your order to be sent to a market maker who has the option of holding your order, i am not sure for how long, but in a day trading situation this is no good. 'BEST' routing may be OK for swing trading...

    regarding SuperSOES...i wish i knew what was going on with that! i have looked through several threads and have found no definitive answers. i followd a link in a thread to IB and copied this paragraph:

    "Please note that for Nasdaq stocks that are not National Market System securities (e.g., Nasdaq Small Cap stocks), NASDAQ's current SOES and Selectnet will remain in operation according to the same basic rules as in the past. IB customer orders in these securities that are routed to "SOES" will go to SOES, and orders routed to "Nasdaq" will be preferenced to a market maker or ECN via Selectnet"

    so apparently when routing 'Nasdaq', if it happens to be a Nasd. small cap your could go to a MM who could hold it for a while...not good
  4. Atlantic



    to island: i started my trading on ib-tws with routing exclusively to island - the executions there were always VERY fast - simply wonderful - BUT: spreads sometimes occur to be too large - so this can cost you a lot of money - even on a liquid stock.

    concerning nasdaq/soes: i traded qcom (almost exclusively in the last weeks) - a very liquid stock, as we know - and since supersoes is here - things aren't the same any longer. i changed from island to nasdaq, because on nasdaq the spreads are the tightest - although shorting on nasdaq is a torture - meanwhile it's never been a problem with island.

    but nevertheless - i was pretty happy with my nasdaq fills - but - as i mentioned in my previous post: bid/ask on nasdaq are NOT the same like soes. so if i make my order with the bid/ask from nasdaq - and then it goes to soes - this explains all the troubles. because since last week - 8 out of 10 orders i make get rejected. this concerns longs and shorts as well.

    so in my opinion, it's no longer useful to route to nasdaq, because it is like shooting on a target, that you can't even see ...

    because of this - i tried BEST yesterday. all in all it's not so bad - but the fills take a longer time, than a simple island- or nasdaq-order - and there are also certain rejections - cause meanwhile the system routes my order to the best place - quotes can already change. on the other hand - shorting is again much easier than it was on nasdaq.

    maybe IB will improve things on nasdaq/soes - otherwise i'll stay at BEST or ISLAND.

    good luck!
  5. nelcat9


    you stated in your 8-9-01 post that you mostly short and never pay attention to the upticks. I have never shorted and am interested but a number of the posts have stated that it is difficult to short due to the uptick, how does one short without regard to the uptick?
  6. roger2



    i used to be with datek and their system would not allow you to enter an order (to short) unless there was an uptick. so i would anxiously wait for an uptick on Streamer (i believe that was datek's definition of an uptick)

    but i am at IB now. i am not 100% certain on this, but i believe that i read somewhere that IB's system will allow you to enter a short order into IB's system and then that system will enter the short order into the market when it becomes possible to do so...IB's system waits for the uptick so you don't have to

    again, i am not 100% sure how it works, i just know that at IB i can enter a short order without watching for upticks. FWIW i have been using IB's "BEST_ECN" routing
  7. nelcat9


    roger2, thank you for the information.
  8. I can enter a short limit order on a downtick at Datek and it accepts it as long as I go through Datek's automated routing. Not sure about a market order, as I never use those....

  9. Magna

    Magna Administrator

    I can enter a short limit order on a downtick at Datek and it accepts it as long as I go through Datek's automated routing.

    When I used to swingtrade I had a fairly substantial account at Datek. I'd place multiple orders late in the evening for execution the next morning. Datek's software refused to accept short orders if the stock merely closed on a downtick. I had a number of discussions with them about this inane policy and their rocket-scientist customer service folks kept insisting that you can't short on a downtick. I reminded them that I wasn't trying to short on a downtick, merely place a market order that would be executed the next day at the first uptick. Didn't matter to them, if it closed on a downtick that's all that was important.

    I immediately closed my Datek account and never looked back.
  10. Turok


    One of the things I really like about IB as compared to MB (RealTick) is the way they handle the downtick rule.

    For purposes of explanation, let's establish that there are (at least) four distinct actions involved in an execution:

    A. Queueing an order
    B. Submitting order from trader to broker
    C. Transmitting order from broker to market
    D. Order execution

    With RealTick I can't even QUEUE an order when the market is in a downtick. Now, this is a real problem because perhaps I simply want to have an order all ready to fire off when an uptick occurs...HELLO!!!!!!! I understand that short sale orders are not to be *executed*, but that is the ONLY rule -- I should still be allowed to be prepared. I HATED RT for this.

    What you see there with MB is an example of *client side* (our computer) rule enforcement. What you get at IB is *server side* (their computer) enforcement.

    Server side enforcement makes a whole bunch more sense for at least a couple reasons:

    1: Server data is fresher than client data because of obvious latency. For purposes of visualization, imagine the extreme example of the market bouncing continually between uptick and downtick with the same frequency as the latency to your computer. What this means is that every time the market is in an uptick, you think it's down and visa versa. In this situation you will be completely screwed with MB(which has both client AND server enforcement) since you can't queue and order when the RT app says the market is in a downtick and when you finally get to submit an order it gets cancelled by the servers because now the market REALLY IS on a downtick.

    2: With server enforcement the user can queue and manipulate an order to hearts content -- even submit it. The server then decides if and when the order can be transmitted on to the market for execution.

    IB's not going to transmit your order on the downtick, but their servers will at least accept your order. Sometimes it comes back cancelled from the market (there is additionally ECN server enforcement, so if IB transmits and the market downticks before ECN execution, the ECN will cancel and return), sometimes you get the stock from the offer side a penny higher (depends on your limit) and sometimes the market will uptick and it hits the bid for you. There's no magic at IB -- I still miss my share of shorts, it's just easier since they have a more intelligent implementation of downtick enforcement.


    Longwinded I know. It's not a simple issue.

    #10     Aug 10, 2001