Hey, this is my most memorable pki experience and the reason I didn't trade it for almost 3 months before I ventured in again. Before Pki split, I had 3k of it at 69 I believe. There was a 5k bid at 68.7. I bailed market figuring that I'd get either .7 or better. Well, I got .8. I was happy until i realized it was 66.8. The F*cker printed me almost 2 pts lower. I complained to my broker who filed a complaint with the sec. (cyber is the best, I've gotten dozens of specialist fills "fixed" when they've been poor) This guy claimed that the best bid was at 55 even though the stock traded over a mil shares a day. He claimed that since there were 7k market ordered in the cue (the other shares were dustin's) he was allowed to print it wherever he wanted and have the bidder get the better price since I was market. I guess he was legally right, but the next print was 1.5 pts above my aweful fill. I never have forgotten that trade. Moral of the story I guess is don't trade at post 10-O (cy, wen and wzr trade there too).
Strange, all I see on this website is writings like "Be calm, be serene, this will take you to trader heaven". No where is there any viewpoints on "pro" bottom-picking...
tntneo: how about a primer on being a 'surrogate specialist,' for a long-time momentum trader on NYSE (it doesn't pay now). Trading against the trend?
chasinfla, I think it is very easy to go with the trend (well at least very large trends, like in the bull market). However, the thing which works all the time is to go against the trend. That's what specialists and market makers do, and they always make money (in the long run). So it does make sense to consider this kind of trading. However, it is so different than momentum trading, it's hard to describe, and there are few books about it. the idea in this mode is to remember that nothing goes straight to the sky or straight to the ground. There are always counter trend moves, and that's what the specialist does. Also, the specialist is involved only 10% to 30% of the time, not really more (and I bet, sometimes less). So you can choose when to trade or not : you trade against the others when you have a chance to make money. the specialist game is also about inventory not trades. there are several strategies. The open strategy often discussed by Don on ET is a specialist game (since you trade with him, against the market). I use other strategies but there are some similarities. tntneo PS : it's not so easy to adapt to this kind of trading, unless you use a known method or are trained by someone. Figuring out yourself is not easy.
hard to figure out...but it has to be done. The specialist makes money, that I know. Consistently, over all types of markets. I also know that every move has at least a partial counter move. I suppose buying on the way down in small bites is the remedy to trying to get it at the bottom, because there you simply won't get filled (well, you might, at the top of the counter move). Still, doesn't the specialist have advantages that put the surrogate at serious disadvantage -- visibility, control of the fill, enormous bluffing power, etc. How does one deal with these. Also, I didn't understand your comment about trading against others, the specialist being involved only 30%, etc. I understand what you're saying, but I'm not sure how that gives me an edge. Can you comment further? Thanks.
chasinfla, sure it has been done. I do it every single day. I hardly have a down day (just a few a month). The specialist does have big advantages. but he has many rules to follow too. The surrogate does not (we just follow rules applicable to all traders). the specialist is, by definition, trading against others : when you buy, he's selling to you, when you sell he's buying. he's trading against the market. however, he's NOT on the other side all the time. that's what I meant by 30% or less. Most traders assume the specialist is always at the bid ask. but that's not true. he's there only when he can make money or when there are imbalances to correct (part of his job). it is my opinion that, as a surrogate specialist, you have big advantages. you don't have to trade when you don't like the market anymore (he does), you can pick your markets, and many other things. tntneo
tetno is right. Usually the specialist is only 10-30% of a stock's volume. Then program trading accounts for another 20% of the volume, some mutual funds, hedge funds, daytraders, other brokers, swing traders and so forth. Robert
I am interested in the open strategy. I read this entire thread but I was unable to figure out what exactly it is. I am hoping that it will enable me to buy the opening dip. I put a stop on a stock as it was trending down at the close. The next day at the open, guess what, the stock opened exactly at my stop, then increased 40 cents almost immediately and never looked back. I believe this is called running the stops, but how exactly was this done? I would like to return the favor. I noticed that the stock always opens with heavy volume, opens about 30 cents lower than previous close and almost immediately jumps up 30 cents. I put in low ball limit orders at the open but they never get executed. wtf. I am hoping this open strategy is related, if not can someone explain this to me? Obviously I am a newbie trader, I have done nothing but lose money, this is my first post here and I am getting a bit frustrated. Please help, I'm getting tired of being the "dumb money".
search more.we have covered every detail of open orders on this site so that anyone could understand it. http://www.elitetrader.com/vb/showthread.php?s=&threadid=3334&highlight=open
tntneo: would you say your are bidding and offering most of the time, then, as opposed to take the offers and hitting the bids? If you're contratrend, I suppose you can get filled on price improvement too...I want to ask more. This is not the same as top/bottom picking, correct?