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Technology Stocks : ADSP - Ariel
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To: TheWay who wrote (1388)11/25/1999 8:15:00 AM
From: xbrent   of 2263
 
Lots of people don't understand how the markets and market makers work. If your long and sell into strength with a small order you will have a good chance of a reasonable fill. Sell into a declining stock and the market makers can and do hold your sell for up to seven minutes and execute it where they feel like usually at the very bottom of seven minutes. Stocks can go down faster than they go up.
In this case ADSP could tank at the rate of $1 per minute. If you think that a stop will protect you guess again. Let say your stop is 12. All that happens is that a sell stop turns into a market order when it hits 12. Then the MM's have seven minutes to execute your sell where they feel like executing it and you have 0 recourse. If your selling say 3000 shares their favorite trick is to sell 100 of the 3000 and hold the 2900 for up to seven minutes and execute it at the bottom. Since your limit stop has turned into a market order you usually can't cancel it as the MM's have it in their grasp. If you buy ADSP say at the open, it could take five minutes for them to execute the order and it is not unsual for them to take five minutes to report a confirmation. Thats a long ten minutes. ADSP is likely to be in fast trading for a few days and thats about how things will work. I had an order in yesterday, they did not execute it in four minutes and I cancelled. I did not want to take pot luck on where they execute. If your selling I would recommend not getting gready as you need to sell into strength, I would peel off shares in smaller lots and not worry about commission. I would be very leary of stop sell orders. If a stock is going to go up the MM's can also see your sell stop, momentarily downtick to pick up your sell and its off to the races while you are not in the race. Mental stops are a good plan
but placed stops don't work so hot in fast trading. A stops on say GM or MSFT will probably work well, but fast trading, heavy volume little NAZ stocks is risky business. You can put in a buy order with a limit, that usually works reasonably well.
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