WSJ: 5 cent increments for 1,000 smallcap stocks starting May 2016

[jtrader33]

Cautious this may be good, really good.

I am a former MM put out of biz shortly after 9-11.

Guys, just use limit orders, play the edges and you'll be surprised.

How do you define "the edges"?

 

[the_axe]

Look at FET today, which I believe is in the pilot.

playing the edges: place bids <$21 (after it opened at 21.15) - you'd get filled, stock lifted, then decided when to get out. If you had long bias, it would have worked well today in FET. Low ball bids, sometimes you get hit, sometimes not, when stock moves in extremes, take advantage of it. Once the extreme played itself out, maybe a 25 cent profit (or more). Ok not much but on 1000 shs, its $250. Playing the edges: don't be afraid to put in low bids, or conversely high offers, the move plays itself out and in this method-could grind out some $$.

I was aware of this pilot, just forgot to watch it until now. Maybe its nothing, maybe not. Maybe I just want the good ole days back. Gives an intra day trader a little cushion, gotta use limit orders, stay disciplined, with todays low low cost of moving shs....could be a new business model possibly, as a trader or prop shop, or I'm a dreamer, probably the later.

 

[Bob111]

I'm kind of skeptical that we (retail) can have any edge anywhere these days over geeks with HFT's and the rest. specially with 60 or so marketcenters/pools /ECN's. is subpenny game still in play?
how bigger spreads can attract more liquidity? (that whats SEC is saying\selling)
they have killed the retail while ago,shooting themselves and the entire industry in the foot. now they have some liquidity because they favored more dark pools,exchanges,ecn's, HFT and whatnot .but if you want true liquidity AND the fresh meat-we need a set of rules that favors the retail, average joe the casino gambler.

 

[jtrader33]

I hope you find something there. I still think adverse selection is going to be too much to overcome. I'm not a HFT boogie man guy, but I think this pilot is going to be bad for retail both ways; still outsmarted when it comes to liquidity provision and increased slippage when a price taker. Will know a lot more in a month on the latter - I'll post some stats here if I remember.

 

[the_axe]

Lots of variables yes. However bids /offers are still time stamped, first in, first in line.

No, sub penny not in play, best I know.

Yea lots of ways to route orders but the nbbo still matters.

 

[d08]

I was aware of this pilot, just forgot to watch it until now. Maybe its nothing, maybe not. Maybe I just want the good ole days back. Gives an intra day trader a little cushion, gotta use limit orders, stay disciplined, with todays low low cost of moving shs....could be a new business model possibly, as a trader or prop shop, or I'm a dreamer, probably the later.

Good ole days, like brokers who want phone trading back so they can rip off everyone else.
I don't see anything positive for daytraders with this bought regulation, I do wonder however how much it costs to buy laws these days.

 

[Bob111]

--Good ole days, like brokers who want phone trading back so they can rip off everyone else.--

Merrill Lynch to End Commission-Based Options for Retirement Savers

http://www.wsj.com/articles/merrill...ased-options-for-retirement-savers-1475784928

 

[poorboy]

For penny stocks, a 5 cent increment is gargantuan. Trade a hypothetically liquid $1 stock, losing 5% going in and another 5% going out results in an instantaneous 10% loss on a daytrade. Do that 5 times and you've lost 50%.

Exactly.

 

[poorboy]

SEC Finalizes ‘Tick Size’ Pilot for Smaller-Company Stock
http://www.wsj.com/articles/sec-finalizes-tick-size-pilot-for-smaller-company-stock-1430949237

WASHINGTON—The stock prices of more than 1,000 small U.S. companies will trade in increments of five cents under a long-awaited plan the Securities and Exchange Commission finalized late Wednesday.

The SEC voted to finalize the highly-anticipated test program that will run for two years beginning next May. It’s designed to determine whether trading the stocks of smaller companies in wider “tick sizes,” or the difference between what traders bid and offer for the shares, will boost interest in the stocks.

The move is a shift from more than a decade of requiring trading in pennies. Wider increments, advocates of the plan say, will allow traders to reap higher rewards, giving them more of an incentive to trade the stocks and lessen volatility. Critics say its goals are aspirational and will accomplish little other than to make trading in certain shares more expensive for investors.

The program will apply to firms with $3 billion or less in market capitalization, down from the $5 billion initially expected.

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Can you imagine what it would do to GM if they had a minimum spread of $1.75?

I think someone has been snorting too much cocaine.