Do you or others on the thread have any success with Selectnet preferences? I for one have never had much luck with this.
I have had excellent success with SelectNet preference orders, while recognizing that they cannot be used effectively at all times. SelectNet preference orders (#reply-10248086) are very good at preferencing ECN's, particularly the one's you may not have direct access to such as INCA, BRUT, REDI, etc. SelectNet can also be used effectively to preference against market makers in ordinary market conditions, but NOT in fast market conditions. Certainly, you will have many times when you want to buy 1000 shares, for example, and the only inside offer in the stock is a MM quote for 100 shares. Most of the time, I will preference the market maker for the full 1000 shares and he/she will fill the entire order. Unfortunately, in a fast market, your order will be ignored and not filled as the market maker eventually re-adusts his/her quote to another price.
Have you ever heard of a system called AutoEx? There are a couple of market making firms that use this. The market makers will guarantee a fill of 1,000 shares (I think) at the best bid/offer even if they aren't on the inside. This would be great at time when a MM is only bidding or offering 100 shares.
Most market makers have auto-execution systems (AutoEx) which are used to fill their order flow in slow moving stocks in order to efficiently buy at the bid and sell at the ask, profiting from the spread. Unfortunately, in faster moving and more active stocks, these same market makers have a nasty habit of turning off their auto-execution systems and filling all orders manually.
I would quickly switch my brokerage account to any firm that could guarantee fills for up to 1000 shares at the inside bid or ask of any stock, and would be gladly willing to pay the spread on every transaction. In fact, I opened a small account with Fidelity to test out whether their AutoEx systems would meet my needs. I found them to be very slow in filling market orders and entirely incompetent in handling limit orders (#reply-10841636).
Unfortunately, I don't think there is any good solution for trying to buy a fast moving stock as it is rising, short of paying several levels higher prices against an ECN. The same problem exists for trying to sell a fast moving stock as it is falling. The best approach for me is to buy with a limit order as the stock comes down to resistance, and sell on strength (#reply-11400801), before it peaks and begins to drop.
Good luck,
-Eric |
