I have a question that ive been wondering about for a few weeks now and this might be the appropriate thread to find the answer. Perhaps one of you could relate the level 2 screen on a NYSE stock to what is happening on the floor. (Beware i am fairly new and may sound naive) My question is: When im trading i show 2 NYSE related numbers on the level 2, what the specialist has offered and what the NY Book is showing right underneath this number. These 2 numbers are almost always the same, if NYSE shows 200 lots, the book also has 200 lots posted. Now I understand there is a delay and that the book may not always be represented by NYSE at the exact second, but sometimes when i trade the NYSE number is very high and the NYB number is very small or non existant. I am wondering where these shares are coming from. For instance: If a stock is trading 10.99 x 11.00 and there is 500lots on NYSE at 11.00 and no lots offered on the to book on the offer, i can list on the specialist and get filled before this 500 that NYSE is showing, but if there is no book and someone crosses up to 11.00, someone is taking the shares and lowering their offer accordingly on NYSE without showing on the NYB. So who is taking these shares? Lots of the time if there is 100 on NYSE and no book, if someone crosses up 100 lots to take out that level on the offer, the 100 lots that have been filled will refresh on the offer and now htere is 100 new lots offered on NYSE and not the book. Is this the specialist or someone on the floor getting short/selling? Any help would be appreciated or if this doesnt make sense i can try to clarify. I have found many times the stock will bouce off these levels if buying gets exhausted, or will break wildly if the order finishes refreshing, so any info on this situation would be great.
Makes sense. My guess would be a specialist hook order given by a floor broker, those don't need to be represented in the OB.
Today I used my floor broker for 2 different stocks WAT and VPI In the beginning of the day I felt that WAT was going to trade down in the 1st ½ hour of trading. This is how my conv went : Me (9:38:19 AM): WAT? Update #1 @ (9:41:09 AM): wat; bear buying working 10k to buy with a 37.10 top, .20 low on 50k is merrill and sb combined â So I figured that if Bear Sterns was buying 10k and 10 cents higher merril and sb were selling 50k â there was good chances that there were more buyers than sellers. I got short and rode him down to $36.50 â took my profit b/c didnât like the lack of very strong volume on the down side. VPI was a much better example he opened up hard â over 10% - initially I thought he would be long â but â before I had a chance to buy he reversed back under $50 â I asked my broker (9:43:50 AM): VPI? Update #1 @ (9:46:12 AM): vpi; .60 top on 10k is ba .80 low on 100k is scattered ----to me that it was simple math again if someone is buying 10k and 10 cents higher there are various institutional sellers for 100k then its obvious more sellers than buyers out there. â (me typing) (9:53:31 AM): keep telling me about VPI if u don't mind - I want to know the general flow of the stock its up a lot - if there are sellers I will get short. Update #2 @ (9:55:29 AM): vpi; helfant is selling it offering 20k @ .15 Update 33 @ (9:55:53 AM): there are sellers (me typing) (9:56:02 AM): helfant is an institution ? I always thought it was like dot {(broker) (9:56:12 AM): its jeffereis , (broker) (9:56:25 AM): they have both institutional and dot} Update #3 @ (9:59:57 AM): VPI; lots of sellers , Helfant, wd and goldman (me typing) (10:00:31 AM): how are they selling mrkt? (broker) @(10:00:40 AM): yes Update #4 @ (10:02:01 AM): the buyside is all specialist and scattered system dots (10:02:09 AM): sellside is still much heavier (10:02:30 AM): offering 100k out loud @ .80 , helf. and goldman combined (10:02:40 AM): no buyside ------I got short on this info mostly thru ECNâs - I wasnât afraid to hit the bids on the ecnâs because I had a strong degree of confidence that this stocks would rip down â if it wouldnât I would get out out a 10 cent loss max â I ended up getting out of most @ $48.10 Since then I churned him a little getting short @ 48.80 ânothing to bad â got long again @ the figure and now Iâm still long b/c I anticipate a slow trend up â will keep you posted. Are there any other traders that are also trading via a broker, come on guys speak Up!!
I worked on the NYSE for 5 years and enjoy your prose! Keep up the journal. I pick off specialists electronically with upstairs flow now. I left The NYSE before decimals! So the markets were "1/2 - 3/4 Merrill by Lexie a hundred up!" You could actually make money back then.
Very cool stuff, as I understand it the looks are free but it's considered good ettiquete to execute through him every 3 looks or so yes? How much size is he expecting you to do through him? With your VPI trades on friday, you got short via ECNs and I imagine you covered on the floor through the broker at those lows?
3 looks for a trade is like a rule of thumb - if you don't execute enough they will start saying that they are busy and eventually drop you. Minimum size is 5k. Many times 5k intially is to large for me - so I will take 5k but split it up with other traders in my firm who want to be in on that order - I got short thur ECN's and actually covered most thru a limit order on DOT. But i could have covered with the floor broker just as well.
"ONE - What Exchanges have you used floor brokers with??" Upstairs, Thanks for the response. I had direct lines to floor brokers in the CME and CBOT Bond, S&P, and currency pits. I also occasionally used some on the NY and international futures exchanges, but mostly in Chicago when open outcry was still king. On the NYSE, how do brokers show their bids and offers and book trades, e.g., do they typically show out loud to the other brokers or are bids and offers always taken to the specialist for exposure to the crowd? Will brokers ever book trades directly, for example will your broker go directly to Goldman to lift his offer, and then inform the specialist later, or are the trades always run through the specialist from beginning to end. Trying to get a feel for how closely the nyse resembles open outcry in these respects. Thanks again.
Brokers can trade without the specialist they use institutional ECN"s - this doesn't get reported to the specialist. In the Pits they can either call out orders or they can discreetly give their order to the specialist.