Trading with a NYSE floor broker

Discussion in 'Strategy Development' started by UpstairTr8der, Oct 11, 2005.

  1. Hello, I am starting this thread because I have not found too much information on Elite about experienced trading via NYSE floor brokers. I am a trader who primarily trades thru DOT (DOT being off the floor direct access). Lately, I have begun expanding my trading horizons and using 2 different floor brokers.

    I would like to start this thread to discuss the best ways to utilize floor brokers for short-term traders like myself. please share your experiences and ideas.
    Here are some of the pitfalls that I have found:

    1. Cost of getting looks. The rule of thumb is executing a trade with a floor broker for every 3 looks. Commissions are without a doubt expensive for floor trading .015-.02 , so basically you have to know what to info look for and how to use that info.

    2. Off the floor traders (like myself) focus on movers, and on any given morning, especially during earnings there can be 7-10 stocks of potential interest. I find it to be impractical and unaffordable for me to get that many looks if I don’t feed enough volume to my floor broker. Knowing this, I try to really zero in on 2-3 stocks that I want to know what the institutions are doing with them.
     
  2. Here is an example of a trade that I did based on information from a floor broker. I was watching NCR in the morning, it was up a lot, and I got an idea that Intuitions might be covering some gains. Especially since the market has been down lately. Looking at NCR I saw three 5 minute periods that couldn’t break 34.34, and each period was on weak volume to the upside. I decided NCR might be a good short candidate. So I asked my broker for a look into NCR, and he said in his 1st update@ (9:40:49 AM): NCR; lxe and dots have been buying, Goldman sold and DBK is a short seller then he gave me an update #2 @ (9:43:29 AM): NCR; .60 top on 25k is fidelity, .65 low on 10k is dbk then update #3 @ (9:56:14 AM): NCR; Merrill and Goldman working 25k for sale combined. Then I asked @ (10:05:02 AM): “Any more sellers in NCR, I see a lot of prints who are they?” – update #4 @ (10:05:38 AM): He replied “Mainly Goldman and Merrill reloading with sellside lots of 20k at a time” It was around this time I got short 4k. Then I asked @ (10:25:38 AM): “Anything new on NCR?”. Update #5 @ (10:29:20 AM): NCR; “Merrill and DBK selling, all dots on the buyside” Update #6 @ (10:30:00 AM): NCR; Goldman is a .30 top on 20k now and .40 low on 20k combined is DBK and Merrill.

    THIS was my last update on NCR for the day. I got out of half @ around $33. Held the squeeze to $33.50. Finally held till $32.00, and got out there the rest.
     
  3. One

    One

    Upstairs,

    I've used floor brokers extensively on other exchanges, but not on the NYSE. How did you find and choose your floor broker, and once you did, how were commissions determined? Thanks and good luck.
     
  4. jsmooth

    jsmooth

    First of all VERY interesting thread, i've never delt with a floor broker, so everything here is new information to me (hopefully this thread will keep going and not end up in PM land).....

    this is a pretty simply question, but can you translate this too someone that's not familar with this floor broker "language": "NCR; .60 top on 25k is fidelity, .65 low on 10k is dbk"...specifically, what does the ".60 and .65" mean???
     
  5. thought about it back in the day and realized that it was impractical for someone who did 100+ trades in a dozen different stocks a day.

    thought about leasing a seat and going down there myself to cut costs but didn't push the idea for the same reasons (and others).

    hope it works for ya.
     
  6. Well both brokers that I used are $2 brokers (basically free agents) - Floor brokers are all about relationships - one of the brokers i met thru extensive networking and the other one I use - my firm highly recommended to me because they already had extensive relationships with him. As I am learning now from speaking to other traders that use floor brokers - What makes a good floor broker is his relationship with other brokers - meaning - usually $2 brokers don't have a bunch of brokers positioned all across the NYSE floor at the same time - so basically when you ask for a look or when you make a trade, your broker many times outsources your request to an other $2 brokers (and they share comm) - if your broker has good connections and is well liked then he will send your request to an other experienced $2 broker not some rookie - or someone that will be pushed around in the crowd physically or verbally. (they actually fight down there in the pits).

    Floor language is a vocabulary of its own - anytime you hear a low of .40 or a high of .80 - simply means that an institution is willing to to sell the stock no lower than .40 cents and buy the stock no higher than .80 cents. Low always refers to lowest price willing to sell and high refers to highest price willing to buy.

    ONE - What Exchanges have you used floor brokers with??
     
  7. If you can say, which firm are you with?
     
  8. I would rather not post in this thread which firm i am with, because I would like this thread to stick to the topic ( trading thru a NYSE Floor broker) - I don't want this thread to change into a discussion about prop firms. If you really want to know then you can PM me and I will tell you. The only thing I will say hear is that my trades get cleared by Merrill Lynch - and my firm is one of the bigger volume trading clients of Merrill.
     
  9. Upstairstrader,

    I must say its a fantastic thread man :)

    So the commission is around $80 one side for 4000 shares correct?
     
  10. bl7077

    bl7077

    I am a trading assistant on the NYSE floor with a firm that specializes in risk arbitrage. I would like to add to this thread with any input I can offer. There is a lot of misinformation in the general public about the floor. By the way, I can give you some looks if you will teach me some strategy. Thanks.
     
    #10     Oct 13, 2005