Specialist manipulation

Discussion in 'Trading' started by Option Trader, Nov 2, 2006.

  1. mats


    I understand from Hybrid system that from now or from the beginning of 2007 these trade throughs should not happen anymore. So can anybody explain why it still happens that there is for example

    ecn bid 10.00
    nyse bid 9.97

    and trades are at 9.97

    #31     Nov 3, 2006
  2. u can see it for uself if it is a scare print: just buy the bid and if u get a fill u know u are wrong and get out on the offer @b/e. i do it sometimes cuz it can be real resistance, especially at round numbers.
    #32     Nov 3, 2006
  3. Having been on the floor for a few years, I can honestly say that you wouldn't want the alternative. If a large order of 100K shares comes in and starts taking out offers in the book willy-nilly, then the stock would bounce all over the place. As traders, we obviously prefer "predictability" vs. "volatility".

    Fair and orderly (sort of) is better than wild swings, IMO.

    #33     Nov 3, 2006
  4. NMS (National Market System) does not kick in until Feb-May 2007, however orders to NYSE are supposed to be re-routed if there is a better market based on NBBO (National Best Bid Offer).

    #34     Nov 3, 2006
  5. Ha, ive got a way better strategy than that! follow a large offer all the way down on a non shortable downtick stock with 100 shares. When you actually do get those 100 shares short, you realize you and all the other short sellers are screwed and then punch long till the cows come home. :D
    #35     Nov 4, 2006
  6. mats


    Thanks Don,
    So does it mean that from feb-may 2007 there will be no trade throughs anymore? (if a sell order comes in, first my bid at 10.00 will be hit and after that the nyse bid at 9.97)

    suppose next bids are at
    9.90 arca
    9.90 nyse

    which bid will be hit first if a sell order comes in with 9.90 limit

    #36     Nov 4, 2006
  7. I agree with this, for me I want to be able to know I can get out where I want no matter what.

    I also am familiar with some nasdaq tricks, like a lot of those .40 drops in nsadaq are flushes and if they flush down thru obvious stops ending with just a few fills right at some whole number support (or rinsing those below whole number stops), most of the time if you keep your cool it will fade back to near the range. This is different than blowing a stop fwiw, this is knowing the behavior of stocks and markets. Look at ERTS 11/3/06 in the middle of the day. I love that.

    On that note, maybe if I spent years trading only NYSE I would be able to make those NYSE games work for me, but, I ain't going to bother. I just figure this mess in NYSE is the end game of these dudes ability to make money the way they used to.
    #37     Nov 4, 2006
  8. I actually did think that hybrid will get rid of all these specialist games. But they are from being gone because they can still artificially control the market in the name of LRP(Liquidity replinishment points). From what I see, no matter where the market price is for the stock, the spec can come in with his LRPs at any price he deems reasonable and just blocks the market off at those levels by refreshing his bids and offers... In the past, the spec would spread only his BID down if he felt the stock was going down or whatever, but his OFFER remained at the current levels and you can try and get out on the ecn. But now he brings both the bid and the offer down to a specific price and completely shuts you off from other market venues and your only out is his LRP price or you can wait till all his LRP shares are gone as he keeps refreshing. On the contrary, you rarely ever see market makers on nasdaq crossing the best bid or offer.

    My main point is that nyse is not exactly the same as nasdaq because of the LRP. So there is no rush for all the nasdaq traders to come rushing into nyse. Yes you get filled immediately, but can you get out at a reasonable price is the challenge. Of course if you are not scalping, all this would seem nitty witty but for scalpers every little thing matters.

    Again I'm speaking from my experience in MA only, maybe others have different experience with hybrid stocks. Feel free to disagree.
    #38     Nov 4, 2006
  9. What about those huge sizes that the specialist flashes and just when you wanna hit it, he removes it. So thats not the specialist? It's a program? I see this often in lvs and x...If the specialist is doing that, Isn't that manipulation?
    #39     Nov 4, 2006
  10. I sure hope to hear some feedback on this one.
    #40     Nov 5, 2006