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Strategies & Market Trends : DAYTRADING Fundamentals
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To: Matthew L. Jones who wrote (4590)10/3/1999 1:56:00 PM
From: Tai Jin  Read Replies (2) of 18137
 
1) ISLD below the inside bid IS NOT how you want to get out because (at least on my system) the trade will be rejected because I would be crossing the market.

That shouldn't be the case. As long as there is an ISLD bid at or above your limit price your ISLD sell should execute against it even if it is below the market. Only when there is no ISLD bid to execute against will your order be rejected due to crossing the market. Perhaps this behavior depends on your broker.

2) If your system allowed it, only the stupidist traders are going to leave their ISLD bid out on a dropping stock. So you will have to go many levels down or not at all to get out on ISLD.

3) The same would be true with all other ECNS.

I guess it's all relative. Many of the stocks I trade are very volatile and less liquid so a few levels down could be a point or more. In these types of stocks I'm much better off taking out the best ISLD bids since the stock is likely to drop several points. Trying to sell to the MMs in these types of stocks will cost you a lot more since they'll just ignore you and drop their bids. Remember there are market orders which take precedence over your ARCA order.

4) ARCA alone gives the ability to (with one click) access the best MM's, and ECN's and get you the heck out before you lose your shirt. ARCA allows me to cross the market as well.

True enough, but as I mentioned in an earlier post ARCA only works your order at the inside market without any guarantee of a fill. You could lose your shirt as the rest of the market falls away while your ARCA order is still trying to get a fill with the lone MM who inevitably ignores your order and drops his bid. In these situations there will be lots of market sell orders which take precedence over your order. So depending on the situation, ARCA could actually be the worst possible route.

5) Just as every square is a rectangle but every rectangle is not a square, ARCA can get you filled on ISLD, but ISLD cannot get you an ARCA fill.

True, but I rarely see anything on the ARCA book anyway. Again this may be dependent on the stocks you trade.

So let me just say that in my experience with the stocks I tend to trade ARCA is much inferior to ISLD in almost all cases (except for chasing a short as I mentioned in a previous post). But certainly the partial fills on ISLD are annoying and cost me a lot in commissions. I'm probably going to trade at a broker that charges a per share commission instead. It'll cost me a lot less given that I tend to make many trades of smaller number of shares.

...tai
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