I had a very enjoyable day yesterday on my visit to my brokers office in New York. After nearly two years of trading with them, I wanted to meet the folks that are so helpful on the phone. If you are dissatisfied with your current daytrading broker, I do recommend you consider them, they are very nice/helpful (Castle Securities, talk to Paul or Steve).
Anyway, they showed me all of their equipment and how it worked. SOES connections, SNET connections, ISLD, NYSE, Internet, routers, switches, aaurrrgh! I'm glad I don't have to understand everything that makes an electronic daytrading firm work.
Anyway, one particularly interesting note from the visit... At the end of the day, I asked about the breakdown of SOES/SNET/ISLD executions for the day. It turned out that:
1) About 70% of all executions were ISLD
2) Of the SOES executions, I noticed that it took an average of 4 partials to fill each 1000 share order!
This just reaffirmed in my mind that SOES and SNET are dead for daytraders. Most of the volume is shifting to the ECNs, since traders simply can't get a fair shake dealing with the market makers on SOES and SNET. I haven't used SOES much in ~6 months, but it seemed remarkable that four partials were typically required to completely fill a 1000 share order. I guess that shows the depth of liquidity and capital that those brave market makers are putting on the line to maintain orderly markets. => The recent rule allow market makers to post as little as 100 share quotes was the final nail in the SOES coffin. SOES is now virtually useless, unless you are a market maker.
-Eric |
