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Hi Jerry,
Here's a little info. you might find helpful....Soes traders take a lot
of flak for the volatility of the market, and a little credit for adding
liquidity....The funny thing is they are able (through ECN's like the
Island) to "play" market maker, and buy on the inside market bid, and
sell on the inside market ask. So while they tend to help exaggerate
price moves, they also provide very healthy competition with traditional
brokers/market makers and as a by product, make it possible for lesser
mortals like you and I to be able to do the same thing....
If you get an account with Datek securities, they hard wire your order
directly to the Island (via LAN) and you can actually place a limit
order to buy at the best BID price, and if somebody is selling, you can
get filled without paying the spread. (Of course, if you're buying and
someone else is selling, you may not WANT to get filled, as the price
may be headed down <g>)
If you have Level 2 Nasdaq screens, or have a friend who does, you can
actually "see yourself" come up on the bid with a limit order to buy at
the current inside bid price !
Of course, Datek has it's own limitations......forget openings and fast
market conditions...they just get overloaded (primarily with people
trying to use the free real-time quote buttons over and over, I think)
But on a stock with a dollar or two spread, this feature can make quite
a difference if you have the patience.
Plus, if you set strict mental stops, you don't have to "give away" the
spread to your downside stop-out point.
I've always wondered about the effect of Soesers on T/A though. I spent
some time at a large Soes shop in lower Manhattan, and there were
150-200 guys, some of whom were turning 150-200 thousand shares per day
(round trips, of course)....The question I've never heard discussed is
what this kind of activity does to open,close,high,low,volume based
indicators like money flow, A/D, OBV, etc..........Especially if they
act as a market maker on one side of the trade, and a retail buy/sell
on the other.
On Intel, it probably doesn't make much difference, but on a stock with
a float of less than 10MM shares ?
Food for thought, eh ?
Dick
P.S. There's no exchange rule against stop loss orders on the
Nasdaq....but brokerages like ML and Fidelity don't allow them, I
suppose because they got tired of explaining why the stop order was
filled at the bottom of a gap down, then the stock closed higher than
the fill.......A lot of stocks have left the Nasdaq because of the
volatility, only to find their share price gradually declines on
less-volatile exchanges.
Greatelto@xxxxxxx wrote:
>
> Hi Dick....
>
> Well, I guess our approaches to investing in the small and micro stocks are
> different. It looks like you follow them very closely with real time quotes.
> I invest quite a bit in these stocks but only follow them maybe once during
> the day and then only if I am interested in entering a trade. Generally it
> is at the end of the day when I check on them. However, this difference (if
> it does exist) should not prevent an occassional post that could prove
> helpful to either of us.
>
> It is my belief that the SOES traders should be banned. I think this would
> cut down on some of the volatile price movements in the market place.
>
> Perhaps your comments on the rip-offs that take place are well founded. But
> it has been my experience that the traders at the bigger (and better) houses
> are more ethical. I currently trade with Merrill Lynch and have not
> experienced what you talk about. True, I pay more but they do discount me.
> And my executions are respectable and acceptable. However, when I do deal
> in a very thinly traded stock, I will use limits only. I may miss it, but I
> pick and set the prices I will pay or get. I am studying the possibility of
> trading on line....but I don't know yet.
>
> I do have a question. Since I do not and will never place an active stop
> order (well, maybe in the event of absence or sickness), I may be a tidge out
> of touch on the latest rules. Obviously, you placed a sell stop on a thinly
> traded OTC stock. I did not think you could place an actual stop loss on an
> OTC stock. What I am saying is this. Perhaps what you thought was a stop
> loss order was entered as a regular sell limit order near the current bid
> price and you just got an execution on a straight sell. This thought came to
> me after I sent my previous post. Check it out and let me know.
>
> Jerry
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