ff,
Learn Island execution and watch the Island book as closely as the tape. It will show you when you'll receive a partial fill for your trouble. Direct access is different from a discount broker in that you can't always execute when you want to. There has to be liquidity to enter and you have to assume liquidity to exit.
The exit is trickier since, if you want out, you want out. If you're long and get caught in a downdraft, don't expect the MMs or ECNs to bail you out, especially on SNet, which is part of Cyber Limit. You'll wind up exiting near the bottom of the swing regardless of what you intended. Part of the liquidity issue is taking your exit when it's there to take. Nothing works better than exiting a winner while the rally is still in progress. If you choose stocks that turn very quickly, all the more important to take the money and run.
You also need to readdress stock selection when first using direct access. If it doesn't have good Island depth and you want to day trade it, pass until you feel comfortable using more esoteric methods. Monday, when Island was down, was liberating for me. Had an excellent day using all the other and secondary execution systems. What a blast. But without Island, day trading as we now know it could not exist.
Choose slower turning stocks until you get in pace with the hotter issues trading through ECNs. For me, WCOM and AAPL provided a great learning ground for ECN execution. I'm just now feeling more comfortable trading Net and crap stocks through direct access and still being able to maintain rather conservative risk management. It's a sense of knowing where the fire exits are and when to run for them.
Alan |
