Chris...I really do appreciate your responses. I think you contributions here will help broaden our discussions of the markets, very nicely.I present these questions as I think they raises some issues that many have not heard answers for before.
You stated that when you get an order to buy 10k or 1k of stock at the market and it is 25 to 25 1/2...you try to get stock at 25 or as cheap as possible andfill the client at 25.....Do you print the 25 1/2 print for the client first and take the risk on gettingit cheaper or do you try inbetween first?What happens if the stock runs higher whileyou are trying to make a profit for the firm? Do you make the client good on his order as though you had represented them agency? basically, do you consider your transactions riskless, where the customer is taking the risks and you take no risks for trying to make 1/2 point on 10000 shares? After all if you are trying to get stock at 25 1/8 and the stockgets hot and runs higher, partyly from your buying pressure, what doyou do, keep putting buying pressure on the stock? Take the offer for yourself and fill the customer higher? or Take the offer forthe client? I find it unique to learn the phsyche of a trader at a firm.
From a psychological standpoint, do you think that 1/2 point on 10000 shares or $5000 is an appropriate "commission', sales charge for 10000 shares? Do your think most of your institutional accounts understand the $5000 they are paying for the trade and 1) like your services so much or 2) don't care because somone else, mutual fund shareholders etc. are paying the bill?
I am just trying to get a sense of the type of client you deal with who wouldbe willing to pay the 1/2 point sales charge when you might not protect them from the order running. Clearly these are not the clients I deal with. I work an order on 2000 shares of Dell, the client wonders why they didn't buy it at the low of the day, and how can I charge them $55 for the trade when e-something will do it for $19. Maybe the client should consider what you would have made on his 2000.
Hope you had a good day in a strong market!
Regards,
Steve@yamner.com |
