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Strategies & Market Trends : Level II Trading

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To: Jay Morrison who wrote (146)	2/9/1998 10:30:00 PM
From: Jay Morrison	Read Replies (1) of 1086

Here is an example. The stock is Oracle (ORCL) Larry Ellison announces in the middle of the day at some tech conference that revenue is growing at around a 25% rate. Good news for the stock because people thought previously that Oracle was going stagnant. The stock begins to move up. The SOES traders spot the heavy buying early in the under market and the buying at the ask. The SOES trader starts buying at the ask to ride this trend. The market maker is pissed because he is getting hit when he would rather have a bit more time to raise his ask. THAT is the key reason why market makers hate SOES traders. They (SOES) are taking away part of his (market makers) money when they do this. Before SOES was around and so common, the market makers could all re-adjust their prices faster than the common trader could get in. The market makers are losing money in volatile markets because the day traders are getting a piece of the move. Jay

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