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Strategies & Market Trends : From the Trading Desk

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To: GT who wrote (3628)	9/23/1998 12:27:00 PM
From: steve goldman	Read Replies (1) of 4969

Sorry I didnt get back sooner, jewish holiday, busy eating turkey and rice...but now my wife wont let me eat for a week, so i guess I have some time to post. Steve - I visited Cornerstone Securities (on of many direct order entry firms out there) and was suprised to find that these traders had a hard time getting in and out of stocks. Their sales line is "we have the fastest executions anywhere" with island/soes/selectnet/instanet etc available to choose from. It seems these ecn's give you the ability to put your order up on the screen fast - but not necessarily get filled at all. Am I correct in assuming that the mandatory fills a discount broker gets from mm's is not available to daytraders using these ecn's ? Absolutely. MM's dont want to offer daytraders and daytrading sorts auto fills. they arent glutten for punishments. And noone offers direct links right into an autofill from an online direct order system. Also, auto fills are great, but not entirely reliable. You need to be able to move onto the next option when the first few dont work well. Also - you cannot cross the market using island - and if soes is bogged down how do you sell fast at the bid ? We have a number of autofills systems from various players as well as other 'smart' technologies, ie. redibook, etc. They all work differently in different situations. Experience and availability tells you which to use... Do these ecn's really give daytraders an advantage or are they not all they are cracked up to be ? An ECN is an ECN is an ECN. Go with the cheapest and fastest when you want to display a bid or offer. I routinely use ISLD as i think they are net net the cheapest. When a trade is placed with lets say waterhouse where do those trades go and how are they able to give price improvement ? I can't speak to that. Are you selling at 1/16 better when the trader sells it for 3/8 higher. NASD limits markups to 5% etc. Or areyou getting the improvement that the trader is getting or is it an accomodation given what he actually makes? Also, you have to net improvements to bad fills. Nothing is cut and dry and that clear. If it were, it wouldnt be the stock market. Regards, Steve@yamner.com

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