Hey Gang,
Ross from MB trading filled in for me today in class while I got my hand operated on... you may find this interesting...
Good Luck
Ken
www.mtrader.com
MTrader Class - 09/22/98 (C) Copyright 1998 The Momentum Trader
[9:37] <RHD> here is what we will do
[9:37] <learner> Dell is cool
[9:37] <Darmm> good idea..dell
[9:37] <RHD> Lets start by me showing you what routes I would use
[9:38] <RHD> I will do this for several times then we will
[9:38] <RHD> stop and discuss why
[9:38] <RHD> we chose a particular route
[9:38] <RHD> so for this example we will use DELL
[9:38] <RHD> I will say things like buy ARCA LMT
[9:38] <RHD> or Bid ARCA
[9:38] <RHD> etc...
[9:39] <RHD> this is assuming we are buyers
[9:39] <Graeme> WHATS THE TOPIC ROSS?
[9:39] <RHD> the same concepts of course apply to either direction
[9:39] <RHD> Topic is "Ideas in Order Routing"
[9:39] <RHD> I will not be using a lot of SN in this example
[9:39] <RHD> we will discuss towards the end, when and how
[9:40] <RHD> so using DELL here we go
[9:40] <RHD> buy ARCA
[9:40] <RHD> all ECN's so no SOES here
[9:40] <RHD> or Buy SN
[9:40] <RHD> buy ISLD, max 2700 shares
[9:40] <Graeme> Max - will You email us this class?
[9:40] <RHD> bid ARCA or ISLD
[9:41] <RHD> Buy ARCA or ISLD
<max> Yes Graeme
[9:41] <RHD> buy SOES
[9:41] <RHD> buy ISLD careful
[9:41] <Graeme> Sorry to interrupt again - what stock are we watching?
[9:41] <RHD> buy SOES only
[9:41] <RHD> DELL
[9:41] <RHD> buy SOES only
[9:41] <Graeme> thx
[9:41] <RHD> Bid ARCA 11/16 etc
[9:42] <RHD> buy ARCA
[9:42] <RHD> buy SOES
[9:42] <RHD> buy SOES
[9:42] <RHD> buy ARCA
[9:42] <RHD> I assuming a buy of 1000 BTW
[9:42] <RHD> buy SOES MKT
[9:43] <Graeme> Ross - can u elaborate on the critera for you decision
making?
[9:43] <RHD> yes I will
[9:43] <RHD> ok so lets talk about what we just saw
[9:43] <RHD> You will notice that I moved between ARCA, ISLD and SOES
[9:43] <RHD> quite a bit
[9:43] <RHD> the most important thing to keep in mind
[9:43] <RHD> if you use ARCA alot is this
[9:44] <RHD> If you see all those Chippies buying at the "offer" denoted
[9:44] <RHD> by ARCHIPS on the bid
[9:44] <RHD> you know you are in line behind them
[9:44] <RHD> the chance or getting that fill falls dramatically
[9:44] <RHD> so you saw that when that happened I went to SOES
[9:45] <RHD> and when all else failed you may have seen that I sensed
[9:45] <RHD> that GSCO on the offer was about to movre
[9:45] <RHD> so I went SOES MKT
[9:45] <RHD> At time we saw ISLD
[9:45] <RHD> but keep in mind that ISLD with its sizes etc..
[9:45] <RHD> can often leave you with a partial
[9:46] <RHD> Notice I said 'careful"
[9:46] <RHD> because ISLD was showing 1000 as was INCA
[9:46] <RHD> I wanted that ISLD but I knew I was risking a partial
[9:46] <RHD> but I wanted to own the stock there
[9:46] <RHD> When the ASK got deep
[9:46] <RHD> you will notice that I stuck to SOES
[9:46] <RHD> that way I dont take a chance with ARCA
[9:47] <RHD> and getting hit by INCA or BTRD and wasting comm.
[9:47] <RHD> dollars
[9:47] <RHD> so when possible I also
[9:47] <RHD> try to reduce my
[9:47] <RHD> commissions
[9:47] <RHD> here on DELL
[9:47] <RHD> we see 2 ECNs on the ASK
[9:47] <RHD> I can only use ARCA or ISLD
[9:48] <RHD> but depending on whether or not there was a "CHIP" in
[9:48] <RHD> front of me
[9:48] <Graeme> why not SOES?
[9:48] <RHD> is how I would decide
[9:48] <RHD> ECN's ore not SOESable so
[9:48] <RHD> SOES is out of the question
[9:48] <RHD> here I would use SOES
[9:48] <RHD> its deep with MM
[9:49] <ToddB> Ross, does a SOES mkt allow you multiple executions at
different prices if the ask moves without having to use two tickets?
[9:49] <RHD> but there are no Chips
[9:49] <Graeme> Sorry - I am stupid - so who do I use SOES with? whats the
criteria for a decision to use soes?
[9:49] <RHD> then again INCA is there I why
[9:49] <RHD> waste the comm.
[9:49] <RHD> Toddb, yes it does
[9:49] <ToddB> thx
[9:49] <RHD> SOES is to the MM only
[9:49] <RHD> so again here I would use SOES not ARCA
[9:50] <RHD> everyone should understand this point
[9:50] <Graeme> Ok - so i can't SOES ISLD ARCA etc...
[9:50] <RHD> SOES here not ARCA
[9:50] <RHD> Gra, correct
[9:50] <Graeme> But I can SOES GSCO etc...
[9:50] <RHD> here as it thins out we
[9:50] <RHD> start thinking ARCA
[9:50] <RHD> now ARCA only
[9:50] <RHD> now ARCA only
[9:50] <RHD> now ARCA only
[9:50] <RHD> maybe ISLD but becareful
[9:51] <runner> What is the fast why uot of stock SOES market or ARCA market
when you are in trouble?
[9:51] <RHD> as you see
[9:51] <RHD> you may have just got a partial
[9:51] <RHD> runner, all depends on what we are discussing here
[9:51] <RHD> those that use our system and used to be
[9:51] <RHD> with DATEK, Etrade etc...
[9:52] <RHD> those orders are basically SOES orders
[9:52] <RHD> but they do not kill if they miss
[9:52] <Graeme> ??
[9:52] <RHD> so just understand that is what SOES is to HTML type systems
[9:52] <RHD> so lets go back to it for a few more mins
[9:53] <RHD> and add bidding to the equation also
[9:53] <RHD> Bid ISLD or ARCA
[9:53] <RHD> Bid ISLD or ARCA 7/8
[9:53] <RHD> or buy SOES
[9:53] <RHD> or buy ISLD
[9:53] <RHD> wide open here
[9:53] <gainer> I just got filled for 100 on SOES at 7/8 and then my order
was killed
[9:54] <RHD> because the Ask is 15/16
[9:54] <ToddB> that's why I asked that earlier gainer.
[9:54] <gainer> it was n't when I entered
[9:54] <ToddB> partial fill and kill
[9:54] <Graeme> Was it a LMyT order?
[9:54] <gainer> that's just as bad as ISLD
[9:54] <altaaboy> Ross does Soes tier limits only apply to MM's
[9:54] <gainer> limit
[9:55] <RHD> alta, yes
[9:55] <RHD> gainier, you hit the last lot at that price
[9:55] <RHD> a LMT SOES will kill
[9:55] <gainer> ok
[9:55] <altaaboy> ok
[9:55] <RHD> at a new price LVL
[9:55] <RHD> a MKT SOES will not
[9:55] <RHD> hmmm
[9:55] <RHD> no vol.
[9:55] <RHD> q's until it starts moving again/
[9:55] <RHD> ?
[9:56] <RHD> As an added speed idea
[9:56] <rwencil> RHD..list ECN's?
[9:56] <RHD> you may want to have 2 MM's and the big OES all set to the same
stock
[9:57] <RHD> but each set to a different route and order type
[9:57] <RHD> then just press the Buy button on the screen that fits the time
[9:57] <ToddB> Ross how would sell here at 60?
[9:57] <RHD> ATTN, BTRD, INCA, ARCA, ISLD, REDI,
[9:57] <Graeme> Ross - so today - when i was trying to sell CSCO and I was
using ARCA, I saw lots of T&S order popping off at my ask - I was on top of
the list on L2 - but took a while to get filled... i am afraid to cancel
the order and re-issue using another ECN cause i have to go to the back of
the line - suggestions?
[9:57] <RHD> Sell ARCA or ISLD 60
[9:58] <RHD> Gra, there is no line to LVL
[9:58] <RHD> first there is not first filled
[9:58] <Graeme> Oh
[9:58] <RHD> Todd, and you not "selling"
[9:58] <Graeme> But that is tru of ARCA?
[9:58] <RHD> your "offering"
[9:58] <RHD> Gra, yes
[9:58] <ToddB> correct. thx.
[9:58] <RHD> ok, lets try this
[9:58] <ToddB> it's a tough execution to hit.
[9:58] <RHD> offer 15/16 ARCA
[9:58] <RHD> offer 15/16 ARCA
[9:59] <RHD> or sell SOES
[9:59] <RHD> or buy ARCA
[9:59] <RHD> or buy SN 15/16
[9:59] <RHD> Buy SN 15/16
[9:59] <RHD> Buy ARCA 15 /16
[9:59] <runner> Is there extra charge if you hit INCA or BTRD ?
[9:59] <RHD> runner, yes there is BTRD .015 and INCA just raised their price
to .0125
[9:59] <gabeo> RHD, can you split the trade quantities between two routes,
like 1K for SOES and 1K for ISLD at the same time?
[10:00] <RHD> gabeo, 2 tickets
[10:00] <RHD> Buy ARCA 15/16
[10:00] <RHD> or Buy SN 7/8
[10:00] <RHD> or Buy SN 15/16
[10:00] <altaaboy> sn broadcast?
[10:00] <runner> How can you avoid there charges ?
[10:01] <RHD> runner, thats what were teaching here
[10:01] <RHD> yes SN broad,here
[10:01] <RHD> or Buy SN 15/16
[10:01] <rwencil> When SN broad v pref?
[10:01] <RHD> I want the liquidity
[10:01] <RHD> in this situation
[10:02] <RHD> no one showing big
[10:02] <altaaboy> SN pref when selling into strength?
[10:02] <RHD> buy SN 60
[10:02] <RHD> broad
[10:02] <RHD> buy SOES
[10:02] <RHD> buy SOES MKT
[10:03] <RHD> scratch that last one
[10:03] <RHD> mistake
[10:03] <ToddB> btw - thanks for that buy call at 7/8.
[10:03] <RHD> remember to do this my eyes are not only
[10:03] <RHD> glued to the MM screen but also the T&S
[10:03] <RHD> lol
[10:03] <RHD> you have to see the prints
[10:04] <RHD> if the stock is moving on no trades
[10:04] <RHD> you should really use caution
[10:04] <RHD> often what is teremed a "head fake"
[10:04] <RHD> bid 1/16
[10:04] <RHD> selelrs
[10:04] <RHD> sell SOES
[10:04] <RHD> Sell SN 1/16
[10:05] <rwencil> When SN broad vs pref?
[10:05] <RHD> I want the MM to see me
[10:05] <RHD> I need bang for my buck
[10:05] <RHD> buy SOES mkt
[10:05] <RHD> cancel
[10:05] <RHD> buy ARCA
[10:05] <RHD> buy ARCA
[10:05] <RHD> buy SOES
[10:05] <RHD> chip ahead
[10:06] <RHD> cross, cancel
[10:06] <RHD> bid 1/16 SN
[10:06] <RHD> ISLD size
[10:06] <RHD> chips ahead
[10:06] <ToddB> Ross - can we try something with a thin LVII. like AMZN?
[10:06] <RHD> ok, lets go to AMZN
[10:07] <RHD> spread, use SN here
[10:07] <RHD> bid 3/8 ARCA
[10:07] <RHD> or Buy SN
[10:07] <runner> ROSS how about level III are going to have that ??
[10:07] <RHD> yuck
[10:07] <RHD> runner, funny
[10:07] <RHD> buy 1/8 SN
[10:08] <RHD> or buy 3/16 SN
[10:08] <RHD> ISLD gets disrespect
[10:08] <RHD> so I would undercut him
[10:08] <RHD> and hope a MM would hit me
[10:08] <RHD> buy 3/16 SN
[10:08] <ToddB> disrespect from the MM's?
[10:09] <RHD> buy ARCA 5/16 also
[10:09] <RHD> ISLD is going to get traded around
[10:09] <RHD> a lot more than a SN trade
[10:09] <RHD> so I can often get a full fill below the best ISLD bid
[10:09] <ToddB> so when SOES isn't really an option you go to SN, true?
[10:09] <RHD> correct
[10:09] <RHD> or ARCA depending on the other ECNs
[10:10] <RHD> bid 1/4 SN
[10:10] <ToddB> cool, thx.
[10:10] <RHD> now NITE is bidding
[10:10] <RHD> so Im rethinking here
[10:10] <ToddB> are you making your price choices by the T&S?
[10:10] <gainer> would you go below best bid on other stocks?
[10:10] <RHD> ATTN is also offering
[10:10] <RHD> so agin Im rethinking
[10:10] <BillyD> Ross-I had a soes sell limit 1/16 below the bid when there
were5 MM for 24 sec and no fill...soes is terrible unless it is a slow stock
agree
[10:10] <RHD> this is where you will se many trades going off between the
spread
[10:11] <RHD> Bily, if that que is full, you can wait for mins
[10:11] <altaaboy> Ross if no ECNS on other side of you dont use ARCA?
[10:11] <RHD> this is all ECN's so you have to be careful
[10:11] <BillyD> Ross...the bid never dropped and is what confuses me
[10:12] <RHD> alta, depends what ECN and the size there showing
[10:12] <altaaboy> ok
[10:12] <RHD> Billy u were selling to the Bid?
[10:12] <RHD> hitting the bid?
[10:12] <BillyD> I was trying to ensure getting out just in case cause CIEN
a fast stock
[10:12] <BillyD> selling below the bid by 1/16
[10:13] <RHD> Gang, my meeting just showed up. I have to take it. Can we do
more tomorrow?
[10:13] <ToddB> thanks a lot ross
[10:13] <BillyD> yes thx ross
[10:13] <murf> Lets
[10:13] <gainer> thanks Ross
[10:13] <RHD> Billy, that may not work well as it is still a SOES que issue
[10:13] <rwencil> must do
[10:13] <runner> Why there is extra charge on INCA.. etc.. ?
[10:13] <RHD> .
[10:13] <altaaboy> Yeah thanks Ross real helpful
[10:13] <SteveB> thanks!
[10:13] <RHD> Be back in a bit.
[10:13] <gainer> almost made some money there
[10:13] *** RHD is now known as RHD_AWAY
[10:14] <altaaboy> Anybody care to summarize this stuff?
[10:14] <NINJA> That is the knid of training we need more of.
[10:14] <altaaboy> yeah real nice
[10:15] <gainer> yeah that was cool
[10:15] <Nesi> email will be send...
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