So apparently the uptick rule is coming back. Any one care to describe how automated trading systems interact with it? I may watch my price feeds and only short shares after there is an uptick, but in very liquid stocks, by the time my order gets to the exchange, there might have been a couple more down ticks in a row. Besides, what actually happens if I short into down ticks, is it the brokers responsibility to reject it? Does the exchange reject it? Do I get a call from a nice man in the middle of the day? Any help will be appreciated. Thanks
no, you can short whenever, but you will only get filled on an uptick. so if there were a series of 10 trades, 5 up and 5 down... and 10 sellers... w/o uptick rule all 10 would get executed... w/it only 5 would. (the other 5 would have to wait for further upticks).
Thanks, very helpful. I didn't get into algo/auto trading until just after the uptick rule ended. I had an academic curiosity, didn't think I'd have to worry about it in my own system so soon.
in my example above, all the sellers and buyers were of the exact same size. if they weren't, you could have more than one seller filled on the same uptick. somebody recommended I point this out. also obviously in all cases you can still get a fill, you just have to wait longer because you can't get filled on any old tick as per the present situation (if uptick goes away). if uptick rule goes away completely... it makes algo trading a little more complex, because you can't assume a market order will always get you in.... sort of increases stuff to pay attention to from ATS side.
The uptick rule is actually a non-down tick rule. It can be the same as the last tick or an uptick, and it does not apply to ETFs. So the big players will just work the ETFs or futures to gain immediate results. The uptick rule will only slow short attacks, not prevent them. Time spent on this topic is wasted.