Steve, I'm no where near the trader as you, Irby, and some others around here, but I've followed the comments here and the Final Frontier for some time now. Some things that have been said about executions have made sense, some things go over my head.
The last week or so I've been just playing around trying to scalp a few 1/4 and 3/8's and trying to learn some things on the fly. I've been playing with a few stocks with a bid/ask spread of 3/8 to 1/2, say for instance 40 by 40 1/2. I've been placing my orders to buy 1000 shares at 40 1/16. According to what's been said here, I thought the MM's had 60 or 90 seconds to fill my order or else publish my order as the new best bid and change the quote to 40 1/16 by 40 1/2. About 95% of the time, this is what happened, and the next print at 40 1/16 filled my buy. I then entered my order to sell at 40 7/16, and the same thing generally happened (ie quote changed to 40 by 40 7/16 and the next print at 40 7/16 filled my order and I had a 3/8 profit). This has happened regularly enough for me that I've figured that this is the way it is supposed to happen (although it seemed too easy and too good to be true).
My question is, it doesn't always happen this way. Today for example, a stock was quoted at 42 1/8 by 42 3/8. I placed a order to buy 1000 at 42 3/16. Nothing happened. The quote remained the same for approximately the next 15 minutes, and I watched orders go thru at 42 1/8. I would have thought they would have had to change the bid to my 42 3/16 and fill my buy at 42 3/16 since it was a better price than the 42 1/8 they were filling. Eventually the bid did raise to 42 3/16, and then went to 42 1/4, and I never was filled.
Can you give me some comments on this.
I'm just using E*Trade and no fancy trading set up or Level II, but have been doing pretty good without them.
Would it make a difference if E*Trade was making the market in earlier stocks I flipped this way, and was selling the order flow for the stock I tried today?
Does the quote have to change to reflect all best prices available (including mine)?
If I enter the best bid, do they have any obligation to fill me, or can they trade around me even if I was first in line at that price?
I'm just curious why this works for me most of the time, but not all of the time, and if I'm being screwed or not the times it doesn't work.
Any thoughts appreciated. Thanks,
Steve |
