Using SLIP to short

Discussion in 'Order Execution' started by chiefraven, Jan 4, 2006.

  1. Anyone familiar with using the Slip to get short? I hear it's pretty expensive, but how does this actually work. I'd like to know how much it will cost me to use the slip order.... and when do people usually use this as a way to get short?

    One day i used slip 4 times and it ended up costing me 19 bucks or so worth of fee.

    If anyone could give me a low down on this i would really appreciate it.
  2. Slips suck, I avoid them at all cost. Just get conversions in the stocks you want to short. My firm has conversions on a ton of NYSE stocks and we can use them all day long, although we get charged per use. But they are way better than Slips.

  3. could you explain how slips work though? like how efficient they are at shorting, as well as how the fees are charged.
  4. Slps allow you to sell on downticks, you have a key designated for SLPS and you hit the key to get filled. Usually you will hit the bid and get filled on the offer (ie 50.35 X 50.39, you hit the bid at 50.35 and your short price is usually 50.39)

    Their fill ratio is fairly low, and it seems like they wont give you the SLP when you need it most.

    My firm charges $4.25/1000, so they are very expensive.

  5. hit the bid and get filled on the offer? that doesn't make much sense though... how could it give you that much of an advantage... if you use the slipt at .35 x .39, you hit the bid and get filled at the offer..... so instead of getting a fill at .35, you're saying you get filled at .39.... that souds too good to be true.... since you want the stock to go down, you would want to get a high offer, and hope the offer would go down...

    i've heard that when you use the slip you get filled 2.2 cents below the bid you're hitting... or something like t hat... maybe you could clarify that for me?

    or anyone?
  6. Thats how it is with SLPS man, you hit the bid you (usually) get filled short from the offer (cant slp into a spread greater than 5 cents). If you slp into position with spreads of 4 and 5 cents constantly, you will get a de-bate but if you slp into position with 1-2 cent spreads, you will get rebates. The cost structure allows you 3 cents on avg to slp into positions.

    Of course its an advantage getting filled on the offer but it IS a very expensive product. But, believe me, hoping the stock will go down just b/c you slp'ed into it, wont make it happen.

    Bottom line, SLPS arent a very good product. Very $$$ and low fill ratio.

  7. Htrader

    Htrader Guest

    But what exactly is a SLIP? And how does it allow you to short the stock?
  8. Its a short product offered by Essex, the firm that use to offer Bullets (before they were deemed illegal).

    Essex, through the SLP product, basically buys the offer and quickly sells to the bid (in a 5 cents spread or less). They give you a short fill from the offer price. The reason they can do this is because the product is expensive (more expensive than buying the offer and selling back to the bid, at least thats the plan). But they have a risk management algorithm that decides whether or not to give you the SLP fill and, from my experience, their fill ratio is horrible.
  9. hey steve, could you take a look at my post in the strategy section? i have posted a very recent post in the TAPE READING thread.

    Also, could you maybe tell me what people mean when they say look for "uptick bids" if you're longing a stock.... and how exactly can i decipher the meaning behind a stock through looking at the prints + bid/offer? Like i hear noticing where the prints are made are important... whether it's being printed at the offer price, at the bid price, closer to the bid price, closer to the offer price... etc Maybe you could give me a lesson on how to read the correlation between these two things a little better?
  10. bdon


    You do hit the bid and get filled at the offer for purposes of reporting (Essex is giving you the stock on the legal uptick). However on top of the outrageous ticket charge, you have to also pay the spread between the bid and offer back to Essex.
    #10     Jan 4, 2006