The new hybrid system and scalping equities

[Moneyball]

Quote from FastandFurious:

I assume the introduction of the hybrid system there will still be market shorts from institutions, but is it going to be the same? Not sure. Hope someone can give a perspective. Is scalping still worth it when the hybrid market comes? Or is scalping worth it at all?


I get short when the size steps down aggressively as well on ECNs, but what's ironic is that the ECNs behave like the specalist, I get filled lightning fast when the situation is bad, and never gets filled if the situation is good, and results me in cancel the order when the market short is about to be over.

Nobody knows exactly how it's going to be with the new rules in place, all you can do is wait and see. For the type of trading you're describing, my guess is that it's not a good development, but you'll find out soon enough.

As for the ECN behavior, that's just other traders like you putting their orders in trying to get short, then cancelling once they think it doesn't look so good. That will probably continue, but as rjv said, now some of those offers are going to go much quicker because you can take as much of it as you want. My guess is a lot more whipsaw action, so be careful.

 

[FastandFurious]

Quote from Moneyball:

Nobody knows exactly how it's going to be with the new rules in place, all you can do is wait and see. For the type of trading you're describing, my guess is that it's not a good development, but you'll find out soon enough.

As for the ECN behavior, that's just other traders like you putting their orders in trying to get short, then cancelling once they think it doesn't look so good. That will probably continue, but as rjv said, now some of those offers are going to go much quicker because you can take as much of it as you want. My guess is a lot more whipsaw action, so be careful.

well, market shorts will still be there, but there will be no NX limit (well, unless you short a million shares). So when you say that it's not a good development, why is that so? The wall/size will get blasted because of the no limit addition or because the new system suggests characteristics that are not in favor of market shorts. All in all, institutions still have to accumulate/dump shares so there will always be market shorts, just that...maybe the new system will make more shady to stay true...

 

[Steve Tvardek]

Market shorts, IMHO, will be affected quite negatively when this whole thing rolls out. My advice, would be to work on other techniques so that you are prepared.

Quote from FastandFurious:

well, market shorts will still be there, but there will be no NX limit (well, unless you short a million shares). So when you say that it's not a good development, why is that so? The wall/size will get blasted because of the no limit addition or because the new system suggests characteristics that are not in favor of market shorts. All in all, institutions still have to accumulate/dump shares so there will always be market shorts, just that...maybe the new system will make more shady to stay true...

 

[FastandFurious]

Quote from Steve Tvardek:

Market shorts, IMHO, will be affected quite negatively when this whole thing rolls out. My advice, would be to work on other techniques so that you are prepared.

I am currently working on other techniques. I am curious to see your perspective as to why and how bad will market shorts be affected.

 

[Dogballoon]

Quote from FastandFurious:

I am currently working on other techniques. I am curious to see your perspective as to why and how bad will market shorts be affected.

A countertrend scalper, for instance, could set sell limits totalling up to 5,000 shares about .10 above the market short, wait for it to approach the half if it has been falling for 20 cents or so with size on the offer, NX the size for 5,000 shares and sell immediately to the daytraders panicking to cover on ECNS or through SDOT.

It will probably be very easy for people to employ this strategy on occasion, if they are nimble enough on the keys. Then the market would adapt and larger sellers might step smaller size, get it lifted, come back to push down again, etc.

 

[Steve Tvardek]

B/c of the unlimited NX. I feel more traders are going to have itchy trigger fingers if they feel less protected. Now there is a 1000 nx limit and it is easier to not uptick the stock but Oct 6th on I think there will be a frenzy (moreso than ever) and shorts wont travel as far. People will be more likely to kill the momentum and stop the move

Of course I have no proof as to if this will happen but just knowing market dynamics like I do, I can forsee this killing good short plays.

Quote from FastandFurious:

I am currently working on other techniques. I am curious to see your perspective as to why and how bad will market shorts be affected.

 

[FastandFurious]

Quote from Steve Tvardek:

B/c of the unlimited NX. I feel more traders are going to have itchy trigger fingers if they feel less protected. Now there is a 1000 nx limit and it is easier to not uptick the stock but Oct 6th on I think there will be a frenzy (moreso than ever) and shorts wont travel as far. People will be more likely to kill the momentum and stop the move

Of course I have no proof as to if this will happen but just knowing market dynamics like I do, I can forsee this killing good short plays.

steve, what are your plans in regard to this eminent change?

 

[Steve Tvardek]

I do not depend on large size stepping down to make $$$ trading NYSE. Sure, I do catch some trades like this but I have many other intraday strategies that I already employ.

I do short 1000-2000 shares in front of small shorties (like 2K-4K) but the new hybrid shouldnt affect those types of trades b/c the shorts are so small to begin with, I already have to be lightening quick (plus there arent many others in the trade w/ me at that time so I am not as concerned about missing the lift).

I know that there will be an adjustment period, I am prepared to have to re-learn the game just like everyone else but I am optomistic. People said decimilization would make it imposible to trade; people still trade. Then when bullets went away, people said it was over. But people still trade and make $$$. This will be just another temporary roadblock imho.

Quote from FastandFurious:

steve, what are your plans in regard to this eminent change?

 

[FastandFurious]

Quote from Steve Tvardek:

I do not depend on large size stepping down to make $$$ trading NYSE. Sure, I do catch some trades like this but I have many other intraday strategies that I already employ.

I do short 1000-2000 shares in front of small shorties (like 2K-4K) but the new hybrid shouldnt affect those types of trades b/c the shorts are so small to begin with, I already have to be lightening quick (plus there arent many others in the trade w/ me at that time so I am not as concerned about missing the lift).

I know that there will be an adjustment period, I am prepared to have to re-learn the game just like everyone else but I am optomistic. People said decimilization would make it imposible to trade; people still trade. Then when bullets went away, people said it was over. But people still trade and make $$$. This will be just another temporary roadblock imho.

I see those small but deadly shorties all the time, and I often wonder why they exist or why they are so deadly. I see in the openbook that they would begin with 20k, then grow bigger, then again 20k, then grow bigger again, until it gets printed all. For example, on JCP firday, it was downgraded and there was about 2000 shares keep stepping down, then showed 7500, then a full 10k, then it clears the .00s and repeat with 20k until it gets all printed.

 

[mizer]

FnF.....Is stepping in front of market shorts your main profit generating strategy that you employ while trading listed equities?