Short selling tick test is history.

[ronblack]

Quote from indahook:

http://www.institutionalinvestor.com/Article.aspx?ArticleID=1377545


The Securities and Exchange Commission has unanimously voted to end the so-called “tick test,” which means short sellers will no longer be restricted from selling shares they don’t own just because the price is falling.

Get ready for higher volatility and possibly a plunge. SEC has a short memory I think. Remember Oct. '87? The market is so nervous that any more increases in bond yield can take it back to where it started last year.

Some people want that. They are called specialists. SEC is making a present to the specialists. They have been net short since last year. Time to get their cut. After that they will blame it on the specialists and the market will go all-electronic. But they will be rich before that happens.

Ron

 

[QuantPlus]

Quote from hoodooman:

What about the large spread between buy and ask on illiquid stocks. How will you handle that?

The typical spread on an NYSE stock that trades 50,000/day...
Is $0.03 to $0.08...
So I scalp for $0.04 to $0.06 all the time...
About 400 trades/day.
(10 years ago the same stocks had 0.25 or 0.375 spreads... easy money).

In a fast market today the spread can widen to $0.20 to $0.50 or more...
But that is to the pro trader's advantage.

The key to trading these stocks...
Is that I track several hundred (400-500)...
And maintain a well-hedged, market neutral portfolio of 50 to 100 positions.

Speed as in latency does not matter at all...
A few seconds just does not matter in these stocks...
But analytical computer infrastructure is paramount...
And has to be custom designed and built.
(I'm a software engineer).

This is classic quant stuff.