Chasinfla? Would like to know specifically why you think NYSE is more acountable than a strictly ECN exchange. I personally like to trade Nasdaq for the same reasons the posters on the other thread found fault with the specialist system. I can't imagine given the choices, that one would prefer the specialist over a pure ECN. Could you elaborate? Thank you for your views
I'm sure Chas will respond as well...but I can just say that the pricing aspect vs. speed is only one portion of the differences. Primarily, what concerns many of us is the fact that there is no "centralized marketplace"...where someone is responsible for making a "fair and orderly" market in the stocks. A bunch of people scattered around the Country, sitting in front of a computer that only shows you very limited order flow information, can and do simply turn away from their computers...and don't provide the liquidity needed to make for a fairly priced market. I realize that many OTC stocks are heavily traded, and that the markets are maintained pretty well by simple "players" in the game. But over the years, we've all seen those times when OTC stocks fly all over the place....much to the chagrin of the Public and the Institutions alike. The Specialists system is not perfect, and I am all for "weeding out" of the bad guys....but I think it is like our overall political system, not perfect, but better than the alternatives out there. If you missed Wednesday's Chat...you can check the Log, it may help with the discussion. Don
BTW, I tried the Hunter again just now...and got a "Fill is Good" response... This is hunting time and sales, and is reading from the tape based on price/time...not necessarily telling us if we should have gotten price improvement...right? Nonetheless, a helpful tool, especially for those who don't have access....they can check to see how long their broker held the order before reporting it to them.... Don
http://www.securitiesindustry.com/midweek.cfm?article=1072 This is mother of all SEC decisions as far as NYSE and Nasdaq are concerned
Don, from a purely demand and supply standpoint, the bunch of people you speak of, scattered around the country, are the very same people, consisting of the public, the institutions, the investors and the traders, who trade and invest in both the NYSE and ECN markets. They are the very same people who drive both markets. At the very best, if there is no demand/supply at the moment, then supposedly the most the specialist can do is to temporarily dampen or delay price spikes or perturbations only for a very small time, perhaps only seconds or minutes at the most. Because it is the placement of orders and order flow from these very same people that ultimately determine the price. The specialist can only attempt to smooth out the perturbations and short term volatility for only a very short time. The specialist is not going to take a long term position contrary to the prevailing trend for very long. But these minor benefits happen often at the expense of sometimes living with the abuses mentioned in the other thread. Beyond this point, the discussion becomes somewhat subjective. My own personal preference would be to trade intraday Nasdaq on an ECN, rather than have the specialist do any supposed short term favors for me, at the risk of specialist frontrunning and unfilled orders. Can you understand why some of us feel this way? Thanks for listening and letting me explain.
It's pretty accurate in getting a price adjustment from DOT or not. Price improvement, yes, but depends heavily on the time frame in question. Basically if it says "Check Execution", there is a very high probability that you can get an adjustment. I made it primarily for OTC daytraders because they are not use to the way the listed market works. I don't know if you got my handbook a while back but it was made for OTC daytraders. The hunter is the handbook but electronic(no thinking ). Most listed traders can tell very easily vs. OTC traders that aren't familiar with the way the listed market works. Also some daytraders don't have good time & sales that allow you to see what happended in NY at a particular time period which is very important to getting a price adjustment to see what the market was like in the past. Most daytrading software is made for OTC traders therefore it's kind of hard to look at the time & sales. Also some people don't have a time and sales too, so this helps them too. Hope you liked it. It' a really great tool considering it's free and real time.
I understand your feelings, and everyone can certainly trade whatever markets they choose (as long as they're not using my money, LOL). We have never had consistent, long term, winners who trade the Naz. Our ex MM's weren't able to trade without the order flow. But, I agree, other than that "fact" anything else is subjective. My traders, for the most part, trade the same few stocks.. day in and day out...so they become surrogate specialists themselves, without "having" to make markets if they don't want to. They obviously stay away from stocks that have less than excellent Specialists. We want to be included in trade throughs, and my brother estimates over $100K per year in "price improvement"... and, as I pointed out before...when the markets changed and there is no edge "scalping" or trading "momentum" these days, the pricing is much more important to us than immediate fills. I hope you're doing well, regardless of which markets you choose to trade...and we will likely see more "merging" of trading practices with Arca and Amex dually listing the OTC stocks. Have a great Holiday...! Don
I would offer this attachment for discussion and thought. http://www.nyse.com/pdfs/tradethrough.pdf And, regarding the listing of OTC stocks for Specialist treatment: "For additional information regarding the Amex Program to Trade Nasdaq Listed Stocks, please email 'trade@amex.com' or visit the UTP section of www.amex.com " "Fair and Balanced" Interactive Brokers (smart and solid people), who make most of their money from the ECN's and commissions...and the NYSE who makes most of their money from Specialist fees ...... and the AMEX who is trying to catch up with either other marketplace, LOL I doubt we'll see a purely objective viewpoint (except mine of course, LOL). Don
Re: NYSE Tradethrough report. What a self serving, skewed report this thing is. The gap that McSweeney is so piously pointing out exists solely BECAUSE of the trade through rule. Eliminate that rule, in six months time (or less) there will be no gap. If liquidity on NYSE stocks appears on the alternative markets with fast and sure execution, poof, there goes the NYSE specialist advantage. from the report: "If a buyer or seller of a stock had his or her order routed to trade at the second-best price, then this would add an average cost of 4.21 cents per share to the transaction. This additional transaction cost on public-customer orders would go to the dealer or trader who had quoted a worse price but nevertheless received and executed the order, while the most competitively priced orders are ignored." What a freaking lie. With an ECN trade, the 4.21 cents difference goes to the trader on the OTHER SIDE OF THE TRADE. This may very well be a trader representing Ma and Pa Kettle who McSweeny professes to have such concern about. In any case, I would love to have ONLY 4.21 cents slippage on trades I am trying to close out when the specialist is holding my order. REMEMBER, price improvement for one party is price disimprovement for another. And that other party will sure as heck NEVER be the specialist. And, I just love his table showing the difference between the NYSE prices and alternative site pricing. What the NYSE folks will never show is a chart showing the average FIRM bid/ask spread on NYSE stocks and stocks of similar volume on NASDAQ. Remember, the QUOTE on NYSE means squat, it is what you actually get filled at that matters. Re: The tables in figures 2 and 4. OK, so institutions have a harder time moving size without the connivance of the specialist system. Let the jackasses become better traders. It is a legitimate question as to WHY there is that trading cost difference. Must be those darn daytraders that are hanging around the NASDAQ. Increased volitility is not, by itself, a bad thing for the investor. Again, I am of the opinion the average fund trader is probably not that good of a trader, and gets eaten alive if forced to trade a truly open market. I could be wrong, just basing my thought on what I read here and elsewhere. I would hasten to add that I suspect that the lower volitility and spreads did not necessarily equate to a better trade profit for the ultimate customer, the aforementioned Ma and Pa Kettle. And one final thought. High liquidity is, I would think, a good thing for Ma and Pa Kettle.