also, can anybody anywhere give ANY concrete facts on the new hybrid system. Does anybody out there know? Does the nyse even know? Anybody, anybody at all
If you trade sector stocks on a different dynamic instead of reading the specialist it does not matter much. It's a statistical approach where the specialist is only a hinderance. However, that strategy is better done by a computer anyway, hence the human trader will experience slippage due to slower execution & some emotions. I slowly realized that there is no need for me to be in front of the computer when my strategy could be easily programmed and only needs some occasional input and research from me. It's just logical why the computers will dominate the shorter time frame. Long time frames like half/full day position holds, multi day swings, etc. will be mostly unnaffected. News trading decisions are obviously discretionary also, I doubt that will ever be even significantly affected by computers. What really made me think about this issue was noticing the fragmentation of orders by institutions. The easy 10k+ stepping up orders in the Open Book were replaced by 500-1000 share increments.
Why would it, just look at the gaps on Nasdaq. Uncertainty in opening price & morning trading action is something that will not go away unless trading volume is evenly distributed over 24 hour timeframe.
There could be some good oportunities for arbitrage against ARCA and other ECN's. I'm seeing some of that now on some NYSE stocks, especially on really volatile days. With more of an electronic component, I think it will be harder for the specialist to keep an "orderly and fair" market. The intraday volatility on Nasdaq is about twice that of the NYSE. So, I will be tracking that. The other thing we could see is more "trade throughs" as the specialist resonds to a sharp increase in volatility. The really critical thing is that those people that depend on the NYSE specialist the most, don't take their business to the ECN's. Look at the e-mini and the pit traded contract. Volumes have reversed. Either way, if there is any easy money to be made, it won't last for long.
I surmise the NY stocks would behave a lot more like Naz stocks since the essence of Reg NMS is that there would be less specialist intervention and more computer driven algorithms which means much less price improvements on "clean up" prints wherein the spec walks a big order down. He can't anymore since the algos would wait for 1 sec and then cancel replace the big order with a much smaller one at the NY and slice the balance to the regionals and ECNs.