Prop Trading nasdaq stocks

L

LelandC

Just curious if anyone here is prop or professional trading and focusing on Nasdaq stocks? It seems like a lot of the prop firms tend to focus on listed stocks. From the looks of it Heartland Securities does a lot of nasdaq trading. Just wondering if anyone has any thing to say???

Leland
 
I am currently trading Nasdaq stocks as a proprietary trader for a company called Horizon Capital.

You're right, initially most of the firms I met with only allowed listed trading. I even traded listed for Generic for a couple months but left to focus on Nasdaq again. I much prefer Nasdaq and have had more success trading it. However, I feel that it is a matter of which exchange you have had more experience trading. Prior to trading prop, I traded direct access for a year, focusing 100% of my trading on Nasdaq.

Other prop firms that allow Nasdaq trading include Navillus securities (85% payout) and Tradescape.
 
What's the exact reason that some firms only allow or at least encourage NYSE trading? I read somewhere that there was a rebate given by the spec to the firms for order flow, but I wouldn't bet my life on it.
 
There are a few threads on this site that have discussed the advantages/disadvantages of trading NYSE vs. Nasdaq.

The prop firms that focus on listed trading tend to share the belief that listed is a much fairer and efficient method of trading due to the specialist function. Therefore, they may feel that this exposes them to less risk than trading "volatile" Nasdaq stocks.

Perhaps they also feel that the wide array of sectors found on the NYSE also allows their traders to maximize their profit potential.

It would be great if either Don Bright or Gene Weissman would post on this thread to give their rationale, as I beleive that both of their firms focus on listed trading.
 
There is a great article in Active Trader talking about the advantages of trading the NYSE. Might want to take a look at that. My firm allows both but majority prefer NYSE.

I personally prefer it for the price improvements. Getting my limited orders filled with the specialist. (He get's a block of 80,000 to sell) gaps it .70 and fills me as a buyer .70 away since I had a limit order below to buy. NASDAQ would fill you at your price and than gap .70 to fill the large order.
I find I can control my risk better on the NYSE. When I need out of a large position I can give it to a specialist who if he plays traffic cop (90% do) than he will fill me just outside the bid/ask for my entire position. I've been stuck in a few highly liquid NASDAQ stocks with size and took HUGE slippage. Pretorian2 on this site has had a few of these experiences too. One of the other advantages is being able to read only one person. I traded AK for a few months straight. I can tell you when a clerk is sitting at the post instead of the specialist. You just start to get a feel. I find it extremely difficult to trade NASDAQ now that I'm comfortable with the NYSE. I feel it is easy to swing trade both but daytrading pick one and get used to it.



Robert Tharp
 
Originally posted by LelandC
Just curious if anyone here is prop or professional trading and focusing on Nasdaq stocks? It seems like a lot of the prop firms tend to focus on listed stocks. From the looks of it Heartland Securities does a lot of nasdaq trading. Just wondering if anyone has any thing to say???

Leland
More...

As a matter of fact, we have had our costs lowered to a point that it makes sense for many who like to trade NASDAQ. With new rules in place, and with the ECN merger of Redi and ARCA, we are much more open to the "NAZ crowd"...
 
RTharp, you mention that a specialist will fill your buy order .70 less when he gaps it down that much, you also have to remember that in this situation the seller will also receive .70 less on the NYSE all at one price. If it was Nasdaq, the seller would have the opportunity to hit bids at higher prices before it traded immediately down .70 cents.In addition, I feel that trading Nasdaq is more advantageous than NYSE for the following reasons:
1)ability to follow and trade with the market maker who is the axe
2)faster fills
3)more volatility,hence more profit opportunity
4)Level 2 allowing you to see more than just the inside prices
 
Originally posted by Vinny1
RTharp, you mention that a specialist will fill your buy order .70 less when he gaps it down that much, you also have to remember that in this situation the seller will also receive .70 less on the NYSE all at one price. If it was Nasdaq, the seller would have the opportunity to hit bids at higher prices before it traded immediately down .70 cents.In addition, I feel that trading Nasdaq is more advantageous than NYSE for the following reasons:
1)ability to follow and trade with the market maker who is the axe
2)faster fills
3)more volatility,hence more profit opportunity
4)Level 2 allowing you to see more than just the inside prices
More...

Sorry guys...I have to jump in on this one...

Your first thought, using the .70 cents example..if you were to hit bids (NYSE or NAZ), then the lowest price would be 2.00 lower probably. The Specialist and the executing broker negotiate a "print price" based on existing orders in the Specialist's book. For the print to go off at (down) .70 then the Specialist himself would participate to fill the order. Since most OTC stocks are less liquid (except for the nifty fifty), then it would be MORE advantageous to the seller if he could have the opportunity to negotiate a price with a single entity. So both sides get better fills.

Now...since Level 2 has become pretty much just a tool to fool the uniitiated into believing what they learned in some silly "trading academy" and to put credence in the quotes is ridiculous since many MM's simply fade.

Now, in your favor....the execution speed of NAZ is great, the ECN fills are instantaneous and the overall market is getting much better. As I mentioned in another post, we now have a cost structure that allows for low cost NAZ trading, and we hope to increase our market share considerably.

Good discussion points....:-)
 
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