Adapting to the Hybrid

[gaj]

thanks for the person who posted the link way back on the hybrid, how it works, etc.

or, rather, how it was explained in the webcast.


i turned on the tv last night at 7, had left it on cnbc from earlier, and saw they had a brief thing about the daytraders are back! and some dope is on there talking about how bad daytrading is, and someone else (cyber something - may have been cybertrader, but i doubt it was cyberchase with digit and hacker) puncturing the arguments.

"but we have to protect the people from themselves!"

 

[monistat7]

anyone worried that their prop shop is going to pull a worldco?

almost all traders in my office have cut their volume by at least 50%, if not 75%.

anyway, if prop traders' volume is down 75%, prop shops revenue from trading commissions is down 75%. plus, the old business model of bringing in fresh meat and sweatshopping them for commissions wont work anymore since hybrid will punish you if you churn.

i simply dont see how most prop shops, especially the ones who were very heavy on nyse stocks, can stay afloat with such a huge cut in their revenues.

and i dont see how ppl can compare this change to when they got rid of bullets. that change wasnt nearly as bad as hybrid. and i am in no way saying that you cant make money with hybrid. i am saying that many prop shops wont be able to adapt their business models because they depend on noobs that churn up commissions.

 

[eusdaiki]

well... Swift is doing great. Making more money every day.

 

[HoundDogOne]

This thread is hysterical.

Like the "cancellation fees"...
If anyone bothered to read the PDFs...
Are NYSE $0.01 and AMEX $0.25...
And only if someone is extreme enough to have a 9:1 ratio cancels to fills...
And this is charged on the broker level...
And completely discretionary on the part of the Exchanges.

Actually, discretionary "cancel fees" are part of every standard Clearing Contract...
To keep people from abusing the systems...
And are virtually never charged.

Also...
The if these are enforced...
Trading would completely dry up in the bottom 5% low volume stocks...
The stocks that trade < 5,000 shares/day...
Because only here you might approach 9:1 cancel/fill ratios.

Really... nothing much has changed.

The talented Quants will adapt quickly and roll on...
The Market Manipulators will have to find new scams...
And the Marginal Players will fall by the wayside.

Yawn. Business as usual. Adapt... or die.

 

[traderyin]

Quote from gaj:

thanks for the person who posted the link way back on the hybrid, how it works, etc.

or, rather, how it was explained in the webcast.


i turned on the tv last night at 7, had left it on cnbc from earlier, and saw they had a brief thing about the daytraders are back! and some dope is on there talking about how bad daytrading is, and someone else (cyber something - may have been cybertrader, but i doubt it was cyberchase with digit and hacker) puncturing the arguments.

"but we have to protect the people from themselves!"

I saw that segment as well. Its rubbish and purely entertaining. This is what CNBC loves to do. Set up two guys with totally opposite POV and let them battle out on TV like idiots.

I got a good chuckle out of it.

 

[Don Bright]

Quote from Scalper007:

Thanks, but unfortunately, I'm not using rediplus for the time being. Is there any other way to tell when sweeps are starting and ending?

The book will close temporarily and go 1x1 in the size column. We also have a "slow bid /slow ask" column, perhaps you have one of those.

Don

 

[javs5150]

Quote from Don Bright:

The book will close temporarily and go 1x1 in the size column. We also have a "slow bid /slow ask" column, perhaps you have one of those.

Don

Do you have filters set up that will alert you when a book has closed so you can position yourself for the sweep or do you monitor several books at the same time?

 

[Don Bright]

Quote from javs5150:

Do you have filters set up that will alert you when a book has closed so you can position yourself for the sweep or do you monitor several books at the same time?

We have traders with programs that kick in with a 5 cent (for example) move from last. Newer "scalpers" have bids and offers in at all times on their "children" stocks (stocks they trade every day). We do what we can to maximize our entries via sweeps whenever possible.

Oh yeah, to Monistat7: I have no idea what other shops are doing, but our seasoned traders have adapted quite well - and like getting liquidity rebates (extra money). Pairs guys are happy, and the guys who have programs for triggering sweeps are happy. Our volume hasn't dropped at all. And, as for new people, they simply don't know that we didn't always have the hybrid, so they have no problems at all.

But, you are correct, adapting is crucial to the success of any trader.

Don

 

[Scalper007]

Here is an odd situation I noticed today in MAN. The stock is trading at 75.42 and then all of a sudden PSE is printing $1 below at 74.42. The specialist freezes and all the other ecns are still at 75.42. I have a bid at 74.80. Then the specialist resumes, brings down the stock to 75, and then blasts off to 75.75..I have never seen this kinda crap take place before on the nyse. Can someone please explain to me what is happening here? Why the hell would pse trade $1 below the current market price? And then why didn't the specialist bring the stock down to where pse traded?

This hybrid has created a circus out of the nyse and I've become a clueless clown.

Please see attached for t&s

By the way, thank you Don for the sweep answer.

 

[kwancy]

Quote from Scalper007:

Here is an odd situation I noticed today in MAN. The stock is trading at 75.42 and then all of a sudden PSE is printing $1 below at 74.42. The specialist freezes and all the other ecns are still at 75.42. I have a bid at 74.80. Then the specialist resumes, brings down the stock to 75, and then blasts off to 75.75..I have never seen this kinda crap take place before on the nyse. Can someone please explain to me what is happening here? Why the hell would pse trade $1 below the current market price? And then why didn't the specialist bring the stock down to where pse traded?

This hybrid has created a circus out of the nyse and I've become a clueless clown.

Please see attached for t&s

By the way, thank you Don for the sweep answer.

Yes, I have seen this before but not on a dollar spread..(in theory, where the hell is the LRP?). I have seen that happened on highly liquid stocks on like 20 cents. The sweep happens and then reverts like nothing from naked eyes except on the T&S. MAN is very thinly traded, guess that can partially explain the 1 dollar spread. This is ridiculuous however. Again, market order in the hybrid market is suicidal. Better put an limit island or Arca order to sweep whatever you can get and cancel right away, then repeat until the amount of shares is completely filled.