All about ARCA
Here is the log of the irc chat on #MBTrading
RHD> mbtrading.com
<RHD> The ECN shows on the LVLII as
<RHD> ARCA
<RHD> What this means is that an average user can place order on LVLII
<RHD> A user may join the bid/ask at there discretion
"<RHD> The ECN shows on the LVLII as ""TNTO"", MBTraders will also see?"
<RHD> ARCHIP on there LVLII as well this is the internal book
<RHD> ARCA unlike ISLD etc. has some built in functions that make it a smart ECN.
<RHD> Joining the bid or offer is straight forward just enter the price of the bid when buying
or the ask price when selling
<RHD> and you will see yourself on the MM screen as BOTH TNTO and ARCHIP
<RHD> This allows you to play MM in a sense.
<RHD> As an ECN you are NOT SOESable. YOU ARE NOT SOESABLE
<RHD> You can only be hit by someone who PREFS you. When you are on the bid
"<RHD> or ask and acting as an ECN, like a MM, you can not control the size of your fills,
you can not"
<RHD> force someone to buy or sell all that you have or want and therefore you can not do
AON with ARCA and partials are very possible.
<RHD> Of course all partials are charged as one ticket for this reason.
<RHD> This is the basics of an ECN. Keep in mind that there is no order of filling on the
LVLII system
<RHD> This means that just because you are the first one there does not mean that you are
the first to be
<RHD> filled at that price. Furthermore you often may see trades going off at the price which
you are offering out at.
<RHD> These trades can be going off on SN or SOES. Just because you are at the price
you are not guaranteed the fill. You could theoretically be the last one to be filled on the LVLII
system.
<RHD> The functions of ARCA change when you attempt to buy or sell TO the bid/offer
<RHD> When selling to the BID as an example ARCA will automatically first go to all ECNs
in an attempt to get your fill.
<RHD> If no ECNs are present ARCA will then go to SN to the most active MM with a PREF.
ARCA allows the MM up to 0 seconds to accept or decline the order.
<RHD> This is why many find ARCA to be a slower method of trading. If you are a scalper
you may find using ARCA to sell to the bid/ask nor to be your fastest order route.
"<RHD> When ARCA gone on SN as a PREF you will see ARCHIP on the opposite side of
the LVLII screen and will also see a ""P"" in the status column."
<RHD> What this is telling you is that your order is on a PREF to a MM.
<RHD> At this time you can not be PREF'd by another ARCA who wants to buy. You are
untouchable with the exception of the MM to which you are on a PREF to.
<RHD> When ARCA hits an ECN to complete your order there may be an extra charge. If
ARCA had to sell or buy with INCA or BTRD you do incur extra charges.
<RHD> Yes we know this is a pain but better to get the fill than to miss a 1/16 or 1/8 just to
save $10.
<RHD> Often time in a fast moving market you may find that the display of ARCHIPs lining
up on the bid/ask will cause confusion.
"<RHD> If this is the case and you rather not see this extra data do the following: Go to your
LVLII, SETUP, EXCHANGES TO SHOW then select SHOW SELECTED EXCHANGES"
<RHD> and select only Island and NASDAQ.
<RHD> This will suppress the display of ARCHIP not TNTO.
<RHD> When attempting to sell there is a situation that you need to be careful of.
<RHD> If you were selling and on a PREF to a MM there is a chance that the MM can fill you
as the offer or bid moves higher/lower
<RHD> This is because you were on a PREF as new buyers came in and raised the price
<RHD> In the event you use ARCA to post to the LVLII bid/ask you will place your order
beyond or at the inside market
<RHD> You will see your order represented as BOTH ARCHIP and TNTO. TNTO is our ECN
and is shown on the NASDAQ LVLII system.
<RHD> The rest of the world does not see ARCHIP but only TNTO. You will notice that the
size of TNTO will be the cumulative of all the ARCHIP sizes added together.
"<RHD> Many find that the display of ARCHIP is confusing yet others understand the
advantage of know that there are 10 people willing to buy 1,000 shares each compared to 1
person willing to buy 10,000 shares."
<RHD> For those of you who study the psychology of trading information like this will often
prove helpful
"<RHD> If you were on a PREF to a MM on the bid/ask and that MM fades, i.e. moves from
that price and a UT/DT occurs the inside market has now changed price."
<RHD> NITE 10 HRZG 10 1/8
<RHD> You sell ARCA at 10 and you will now see
<RHD> NITE 10 P ARCHIP 10
<RHD> HRZG 10 1/8
<RHD> ................ HRZG 10 1/8
<RHD> As we can see ARCA is on a PREF to NITE at 10. If the market was to change to:
<RHD> MASH 9 7/8 HRZG 10 1/8
<RHD> Our ARCHIP would detect this and change the PREF (if not filled) to an offer
<RHD> MASH 9 7/8 O TNTO 10
<RHD> O ARCHIP 10
<RHD> HRZG 10 1/8
"<RHD> Almost immediately as NITE leaves the bid ARCHIP not getting filled adds TNTO to
the OFFER comes off its PREF and we are now automatically ""Offering out"" stock at 10."
<RHD> We are now at the will of the buyers
<RHD> If we don't get PREF'd we don't get filled. So a trader may want to consider SN or
SOES as another exit vehicle if you are concerned about getting your fill.
"<RHD> Remember if you are on the Offer you MAY get filled, NOT must get filled."
"<RHD> Maximum shares per trade on ARCA is 10,000 shares per order."
<RHD> ARCA only excepts round lots in increments of 100 shares. This is important to
understand.
<RHD> If in fact you do get a partial on ARCA and cancel the order or the market moves
away you must understand that SN or SOES (or ISLD if there is a bid/offer)
<RHD> as your exit vehicle.
<RHD> Yes you will incur an additional ticket charge if you have to replace your order at a
different price.
<RHD> I think this lesson will give you a very strong foundation for your order entry methods. I
know we are going to have a lot of questions.
<RHD> I just ask the following. Please before you ask questions here make sure you have
read all the previous chat workshops. |
