Modified Uptick Rule
- Thread starter libertad
- Start date
"Under our Modified Uptick Rule, short selling can only be initiated at a price above the highest prevailing national bid by posting a quote for a short sale order priced above the national bid. As such, the execution of a short sale would occur only at a higher price than the prevailing market at the time of initiation, and only on a passive basis (i.e., short sales cannot hit bids)."
I'm not sure I get this. It sounds like the old uptick rule, except for the part I underlined, which I don't understand. If a stock is at $20, and I'm willing to short it down to $19, I should be able to sit on the offer and get hit all the way down to $19, right?
The 10% rule is bull. It's a daytrader's dream. Pound a stock down and then cover when it nears the -10% mark. Pound it down, squeeze it up, rinse, repeat.
I say bring back the original uptick rule. And half of my trades are shorts. Stocks decline quicker than they rise, because fear is a stronger emotion than greed. The uptick rule balances things out.
I'm not sure I get this. It sounds like the old uptick rule, except for the part I underlined, which I don't understand. If a stock is at $20, and I'm willing to short it down to $19, I should be able to sit on the offer and get hit all the way down to $19, right?
The 10% rule is bull. It's a daytrader's dream. Pound a stock down and then cover when it nears the -10% mark. Pound it down, squeeze it up, rinse, repeat.
I say bring back the original uptick rule. And half of my trades are shorts. Stocks decline quicker than they rise, because fear is a stronger emotion than greed. The uptick rule balances things out.
You make an interesting argument. I'd like some references to this extensive research. Any links, articles, or books?
Under the old uptick rule 75% of my volume was on the long side, 25% short side.
Now it's 50-50.
Now it's 50-50.
Look...myself and every good trader I know thrive on volatility. Earnings are directly correlated to volatility. Since the uptick rule was repealed everyone's earnings increased significantly. I'm referring to 10-15 consistent traders that I talk with every day. Take it for what it's worth. Academics opinions don't mean much to me.
But surely, as employees of state-owned US exchanges we can be made to extend capital to bad zombie companies, rather than cutting them short. Just like the employees of state-owned Chinese banks were forced to extend loans to companies during a recession to orchestrate a nice rally on the mainland market.
We are appaled by those 'free market' solutions that would be less administrative and more economic. Like a hefty tax on stock borrowing collected by the broker (already tested with the Citi squeeze). One that would affect also institutions such as mutuals which happen to be 'long only' inverse and commodity funds. That's equally difficult to stomach to the 'free' exchanges like, say, an obligatory VWAP for averyone trading reportable size if VIX jumps more than say three sigmas per hour (in case you wandered, that's my stab at a complex rule, not a recommendation
BTW, fixed percentage cut-offs do not work well for stock returns - they are simply triggered more frequently during volatile periods. So acknowledge that daily range expands due to volatility (in fact all range measures are good volatility measures) and in no way does truncating the reason reduce the cause. Let me just repeat the obvious. Only market participation can be reduced, but upside market movements cannot be orchestrated using administrative means. Just like banks cannot be made to lend to insolvent companies and indebted individuals, so investors cannot be made to buy financially unhealthy bankruptcy candidates.