It seems there is certainly a preference to trade listed stocks as opposed to Nasdaq, at least among the prop firms.. Is there some advantage to trading listed, such as easier to get out of a bad trade (ECNs fade too much), large blocks are cheaper commission-wise, or just that the old-timers traded listed back in the day, and made money, so never saw a reason to change and trade Nasdaq? What should be considered if starting to trade listed stocks, for the experienced Nasdaq ECN trader?
From the firm's perspective, NYSE is less risky than Nasdaq, easier for them to do risk management. From the firm's perspective, NYSE requires higher volume (5000 shares for a quarter on GE instead of say 2000 shares for a half on say MSFT) to make equivalent money of someone on Nasdaq, therefore it generates more commissions. Yes I may be a recruiter but I can not deny the above points. However, from a new trader's perspective, NYSE has better liquidity, a centralized specialist to deal with (less things to worry about), and is without a doubt a better starting point for a new trader because the stocks are slower and more predictable. From an intermediate's perspective, there are a lot more variety of sectors to trade, which makes news trading more effective, and easier to avoid choppy futures. From a veteran's perspective, if you spend years learning tape reading, it is a huge asset, as the NYSE TOS is arguably more useful than Nasdaq L2 and TOS combined in the hands of an expert.
Seems like some of the prop firms are capping the commissions for over 2500 shares on NYSE, so if you are into trading larger size - 10,000 shares costs $50 (.005) r/t instead of $.02 (+ ECN fees if applicable) on the NAS, ignoring for a fact that on this size you will probably get some rebates from a prop firm. Avg +.01 a trade and you are profitable.
There is a big advantage to trading NYSE versa NASDAQ. First off the fills are better using market orders. The specialist knows where the orders are and usually gives lots of warning to the direction where trading the nasdaq everyone is fighting each other. Hedge funds usually trade NYSE because the stocks listed have better earning stability the orders on the books are thicker and less effected by panic buying and selling. Also if you buy or sell into the spread usually your order is matched with block prints. Sectors are also better to trade where in the nasd its more individual issues that move independently. When you make a mistake on the nasd you pay dearly on the nyse the specialist lets you out with a loss but not a screwing. NYSE rules require a specialist to execute all orders in 90 seconds or less. All you have to do is just trade with the specialist and let the profits take care of them selfs.
There is a trader at my firm who only trades Lucent --LU He trades in lots of 9700 shares. (10,000 shares are considered block trades and get attention he doesn't want) His cost is less than .0025 When he is right he makes .08 on 9700 to 30,000 shares when he is wrong he either scratches or loses a penny. On 30,000 --.08 is equal to $2400. Not a bad living. Robert Tharp
Or you could trade a 1000 shares of a Nasdaq stock, pay less commissions by trading less shares, make 1 or 2 points in a few minutes and still come out ok.
You could do that but if you are wrong in a nasd stock and it takes off in the wrong direction you are not getting out until the dead bottom or top. The thing with nasdaq is one loss usually blows up your whole day. Better pay the commission than get wiped out.
Trade555, spec has to execute in 90 seconds? Wow, my Naz orders take 5 minutes to execute. I'll start trading NYSE right away. And if you don't get stupid, most liquid Nasdaq stocks can be exited with a stop loss of 10 cents or less, many much less. I've seen these giant block trades on NYSE come in (no news, just a big trade) and the stock is down 2 points in 2 seconds, pretty rare for that to happen on Nasdaq unless there is news. I'm sure there are many positive things about the NYSE, but exaggerating Nasdaq's faults serves little purpose.
RTharp, one question for you: if one was to come into Echotrade as a new trader with no experience, would the firm let that individual trade ONLY nasdaq stocks to start off?