Direct Access Firms & Trading Mechanics

I would suggest to address all those issues but on a different thread each one.

You can create one thread for LII, one for TA, one for institutional sector rotation, one for daytrading, one for swing, one for options etc

If you try all those issues on one thread it will grow huge and it will be difficult to follow.

I also support your decision Not to reveal the name of the company you work for. The reason is obvious.

Time is not so important to me.

But as I said before use a separate thread for each topic.

I look forward to reading your posts.

ajax
 
I day and swing trade NASDAQ, I only swing trade on NYSE/AMEX unless I'm trading the QQQs due to liquidity, trade futures on FTSE and NIKKEI, and the ONLY time I trade options are to protect large positions or spreads. Single stock Futures will be HUGE! Most firms are saying they will be available in 2 months or so....realistically September. I will be heavy in those due to leverage and the fact that institutions can't participate too much in single stock futures due to the large positions they acquire and lack of liquidity that will be provided for such a position.
 
I'm don't what firm you trade with and what they call their executions, but in a volatile market, say after earnings are announced or stock is released for trading intraday pending news release, there are 2 basic methods that will get you the quickest fill. First one is Smart ECNs with a delta price into the inside price. Example: Your long 1,000 QLGC and the bid is dropping .05/second and you WANT OUT. Smart ECN looks at all ECNs, ignore MMs and sends out the order according to your delta. Say your delta is .05 and the inside price is $47.55. You click or use your hot keys, route order Smart ECN out at $47.50, but the order will execute from the top down to your limit looking for price improvement. Second method: Instead of using Smart ECN, place your order with a .05 cushion (delta price is only example) and go direct to ISLD. You might only see a few levels at different prices or shares sizes BUT you will hit all of the subscriber orders on the ISLD book that some LEvel 2 screens won't show. INCA might be .02 below the inside bid but there can easily be an subscriber order on the ISLD book that is only .01 below the inside that your order will execute with. Keep in mind these 2 methods are best used in VOLATILE states. You will see some slippage in regards to fills but when you look back at where executed and where the stock is currently trading, 80% of the time you got a better fill. There's not one best routing method to use every time. You have to look at the stock, volume, what exchanges it trades on, or how many ECNs vs. MM or Specialists there are. I worked in NY for a year and learned from some of the MMs for some large firms how they trade and what they look for. It took another 2 years later after I traded my own account to finally have an understanding of how and why they do certain things. Also, the turnover rate for MMs is higher than you think. They are not gods and half of them drink more than small village combined. Needless to say, the ir judgement is clouded more days than not. unfortunately we won't see those guys around very long.
 
Originally posted by Seanote
Smart ECN looks at all ECNs, ignore MMs and sends out the order according to your delta. Say your delta is .05 and the inside price is $47.55. You click or use your hot keys, route order Smart ECN out at $47.50, but the order will execute from the top down to your limit looking for price improvement.
More...

By smart ECN do you mean ARCA and/or who else? In regards to ARCA will it not route the order to a MM if it can't cross with an ECN? Why would you want it to ignore MM's anyway? Thanks for your insights.
 
By Smart ECN I mean access to all 9 ECNs. ARCA, ISLD, INCA, MKXT, NTRD, BTRD, REDI, ATTN and BRUT. This why it's some important to pick a firm that has all of these market participants. I'm not anti MM when it comes to executions, but I will target an ECN any chance I have first! With Super SOES coming about a few months ago, it helps alot, BUT if you use Select Net (SNET) good luck. MMs are not obligated to executed if targeting via SNET...it's a negotiated trade. ARCA will re-route your order if there is better price available BUT they use SNET to direct that order to the ECN or MM. Check you ECN fees with the firm you trade at....ISLD typically is free unless you trade over 1,000 shares excluding your base comm.
 
How about listed securities...do you trade 'em? And if so, do you ever find yourself routing listed stocks to the ECN's?

Thanks,
Jim
 
The only listed stocks I DayTrade (DT) are the QQQs on ISLD only. I do swing trade Listeds however. As soon as I have access to each regional and NYSE exchanges Level 2 books, I might trade a bit more. The spreads can gap to quickly and if you NEED TO GET OUT you will pay on the slippage big time! QQQs are great on ISLD. I have a client that moves 50K-100K shares at a time. Funny thing is...well, it's not that funny, when he first started with us he was sending out market order to AMEX and couldn't understand why he was getting fills so far apart at prices not even close to the inside when he first sent out the order. I told him it's called MOVING THE MARKET the wrong way! He's a hell of a lot better trader now! Fairly consistent.
 
for the info. I asked because I'm going to change brokers soon and the new one, I found out today, doesn't let me trade listed stocks on the ECN's. As I send some of my SPY trades to island, I'll probably have to change my way of trading these issues if I can't use an ECN for a fast fill. ALso, my understanding is that there's no shorting on a downtick for any of the ETF's. Strange, 'eh?

Thanks for the fast reply. Glad to have you around on the board!

Best regards,
Jim B.
aka Airspeed
 
During market hours you have to add .01 to the inside bid and post order direct to ISLD. Pre and Post market you can short on a downtick. REDI is the only ECN that wont let you short on a downtick Pre mkt if the price is lower than the previous days close at 4:00pm. We have ISLD, REDI and ARCA for listed right now during mkt hours. If your firm only uses one...shop around and you'll find a better firm.
 
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