Reading the Specialist.

Discussion in 'Order Execution' started by rtharp, Dec 17, 2001.

  1. Deeman-
    Thanks for the info. Very interesting.
    I never had it as my signature, but I use to write "trade what you see , not what you think" all the time......
    one reason I like that quote is that I am a former retail broker, which means I came into this trading game with L.O.D.(long only disease)...and my first few months went like this: oh ,JNPR is down 3 points, looks like a bottom, it should go up. And half an hour later I was stopped out.
    It took me some time to realize the importance of a trend, and not trying to pick bottoms...and realizing what I think doesn't really matter, it's whats on the chart/tape that does.

    Thanks again for the info. I even printed it out for my files. I hope more people can contribute to this thread.
    Peace:cool:
     
    #11     Dec 20, 2001
  2. Deeman,

    Really great stuff. I've got several books that try to explain specialist action and your explanation was far more coherent. Thank you.
     
    #12     Dec 20, 2001
  3. Question for you DeeMan, have you used these same techniques for Nasdaq trading?

    Essentially, the same dynamics apply, it's just more players in the mix.
     
    #13     Dec 20, 2001
  4. Thanks for putting so much effort into such an informative post.

    I am undoubtedly intuition challenged, but I did have trouble with this point:

    "How many times have you seen a bid get hit and then saw the bid step up to a higher level, only to get hit again, and then move to a higher level? Doesn't make much sense. "

    No it doesn't, but I have seen it. I am afraid I still don't understand why. Could you elaborate a bit please. I am missing something.
     
    #14     Dec 20, 2001
  5. No!!

    The NY specialist is a centralised market place.. the influence of regional exchanges and ECNs is minimal. Essentially, you have one buy price and one sell price at any one time.

    On Nasdaq issues, you have buys and sells all over the place... ECNs have a greater influence and each market maker may have a different agenda... its just darn impossible to get a clear read on whats going on in a Nasdaq issue, so its better to use charts with em... NYSE, on the other hand, can be tape read... but I expect the manipulations to commence once the NYSE Open Book becomes widely available.

    Hope that helps! But I'll leave the detailed explanation to Deeman!

    Candle
     
    #15     Dec 20, 2001
  6. One possibility is that the specialist is trying to fill an order for an institution that is desperate to get hold of some stock.
     
    #16     Dec 20, 2001
  7. Really great stuff. I dropped a copy of the script on all the trader's desks in the office tonight. I find it very difficult to find good info about specialist behavior. Plenty of material on Tech. analysis, but not too many people out there with true floor experience to share. I would love any recommendations you might have.
     
    #17     Dec 20, 2001
  8. DeeMan

    DeeMan

    Stock777: Candle is right on the money. You can determine momentum on the NASDAQ from the prints, but there's a lot less to work with considering that market makers accumulate stock for their clients (other institutions), but do not have to print them right away. Unfortunately the large prints on the NASDAQ are far less helpful to us daytraders.


    Dufferdon: I think if you watch these stocks long enough you will come to the conclusion that anything is possible, and like Candle said, there could be a new institution stepping up to buy. Just want to clarify in that example though that if a good size bid is hit, that means that a seller came in and sold stock at the bid price. A Specialist is not likely to replenish the bid at a higher price, knowing that a seller is willing to sell at the previous lower price. This is a completely different scenario than a large bid stepping up on the bid and taking out the offers, which can be common.

    DeeMan
     
    #18     Dec 20, 2001
  9. MD-doc

    MD-doc

    Hi DeeMan,

    Thank you very much, for yours posts. It is really enriching, and especially "truly sharing"...

    Could you specify the "other thread" about this Specialist topic ?

    I tried through "SEARCH" but sorry I can't find it !

    Thanks again and Happy New Year !

    MD-doc
     
    #19     Dec 26, 2001
  10. http://www.elitetrader.com/vb/showthread.php?s=&threadid=3122

    This was the original thread that was getting off topic. It was started about NASDAQ stocks and why most pro firms tend to go after NYSE instead.

    DEEMAN great posts. I'll add to this later on in the week when I get some free time

    Robert Tharp
     
    #20     Dec 26, 2001