The Hybrid?

Quote from shortorlong:

What do people mean on ET when they are talking about 'The Hybrid Market'?

Why has the Hybrid market killed tape-reading?


Thanks,
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Hybrid market is the NYSE Market as it is today, with electronic trading playing a very large role while the specialist plays only a tiny role in the trading of stocks on the exchange. Before the change to hybrid all trades went through one single person, the specialist. Because all trading in each stock was being handled by one person, it was fairly easy for a decently intelligent daytrader to assess the situation (tape-reading) to get an idea of what is going on. Think about playing poker against one person every single hand every single day versus playing against random opponents every single hand. On the one hand you learn the other player's habits and styles, idiosyncrocies, reactions, etc. which can often reveal their hand, while the other way reveals mostly chaos. As a humorous aside, the vast majority of the dummies here on ET supported the hybrid when it was announced since they thought it would be better for them. This must have been because they were too lazy, too stupid (or both) to try to figure this out.
 
Lol. I think the hybrid as "what it was supposed to be" was probably good for the market and the Nyse, but yeah Id rather have my old tape and price improvement back. lol

When you add in reg NMS and new ecn price models and a NYSE system that is inferior to the old auto X then yeah, Hybrid pretty much sucks. lol
 
Quote from ElatedMaverick:

Hybrid market is the NYSE Market as it is today, with electronic trading playing a very large role while the specialist plays only a tiny role in the trading of stocks on the exchange. Before the change to hybrid all trades went through one single person, the specialist. Because all trading in each stock was being handled by one person, it was fairly easy for a decently intelligent daytrader to assess the situation (tape-reading) to get an idea of what is going on. Think about playing poker against one person every single hand every single day versus playing against random opponents every single hand. On the one hand you learn the other player's habits and styles, idiosyncrocies, reactions, etc. which can often reveal their hand, while the other way reveals mostly chaos. As a humorous aside, the vast majority of the dummies here on ET supported the hybrid when it was announced since they thought it would be better for them. This must have been because they were too lazy, too stupid (or both) to try to figure this out.
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Think of it more as playing poker everyday vs. a seasoned professional who not only can see his hand but can see the top cards on the deck and even some of the cards behind them. Plus that player also had relationships with the dealer who brings cards to the table.

The hybrid system ends a good deal of that professional player’s advantage. That’s why there are many fewer of those specialists and their profit margins have suffered.

As a humorous side, the large number of anonymous egos who populate ET would have you believe that despite all the advantages of the specialists they could some how out play them consistently as opposed to the hybrid system which levels the playing field a bit more. This must have been because they know ET is an anonymous forum and they needed to feel better about themselves by belittling other anonymous people here.
 
Quote from dipper17:

As a humorous side, the large number of anonymous egos who populate ET would have you believe that despite all the advantages of the specialists they could some how out play them consistently as opposed to the hybrid system which levels the playing field a bit more.
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Not true at all.

Historically, Specialists have always focused on the big, liquid stocks...
And pretty much ignored lower volume stocks...
Viewing them as little more than a hassle.

In the bottom 20-30% of NYSE stocks by volume...
A focused and well-equiped quant would has had a real advantage over the Specialist...
Not to mention the public.

Today it's EVEN BETTER better than one year ago...
Because these stocks are no more efficient...
But roughly twice as liquid.

If Market Makers were so dominant...
Firms like Bright would not exist.
 
dee dee good points thanks...

I dont know what Bright does and your correct that in the day specialists made their money in the liquid issues.

I was half heartedly mocking the other poster for the comments he made.
 
This got me thinking of a good thread from '03 where the hybrid was debated at length before we knew what was to come.

Here was my stance on the subject.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=23334&perpage=6&pagenumber=1

Quote from Dustin:

Any traders who are calling for the NYSE to be reformed so it can be more efficient don't get it. As traders we are here to pick up the scraps. What scraps are left when a market is totally efficient? Go trade the emini's if that's your game.

Some examples of lost strategies would be OPG's, MOC's, envelopes and others. Why oh why would any trader want an efficient market?!?!

Bring back Grasso!
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Quote from Dustin:

This got me thinking of a good thread from '03 where the hybrid was debated at length before we knew what was to come.

Here was my stance on the subject.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=23334&perpage=6&pagenumber=1
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You are correct.

By definition...
All money made by traders is by exploiting a "market inefficiency".

Historically, the NYSE was not designed to create "efficient markets".

It's always been a massive SKIMMING operation...
Whereby member firms exploited a RIGGED GAME for easy profits...
Focusing almost exclusively on high volume and mover stocks.

Complex or exotic stocks have always traded inefficiently.

On can argue that the NYSE actually created more market inefficiency...
Then it corrected.

Another point...
Most Specialists got their jobs through nepotism... not merit...
The same way a casino executive might get his job through nepotism.
You don't have to be very talented to run a RIGGED SKIMMING operation.

By constrast...
The the top Buy Side traders competing with the Specialists...
Got there on merit... the survival of the fittest...
And are generally more talented than products of cronyism.

And not much has changed.
The market is actually better for talented traders post NYSE hybrid and Reg NMS...
More liquidity = higher volume = higher profits.
 
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