Hey gang,
Ross from MB Trading came in the room today and gave a talk on executions... you may find it interesting.
Good Luck
Ken
www.mtrader.com
(C) 1998 MTrader
ok, class time...
[12:38] <RHD> Ok, let start by pulling DELL for analysis
[12:39] <RHD> Ok, let start by pulling DELL for analysis
[12:40] <Nesi> Please, Double Click on Nesi to send questions for Ken.
[12:40] <RHD> Ok, let start by pulling DELL for analysis
[12:40] <RHD> yuck, any way today we are going to continue
[12:41] <RHD> to work with order entry but we are alo going to add in a bit
of tape reading
[12:41] <RHD> to help determine the fills we can expect as well
[12:41] <RHD> as the routes we should be considering of our
[12:41] <RHD> exits and entries
[12:42] <RHD> Lets start wilt bringing up a TICKER on DELL
[12:42] <RHD> Lets start wilt bringing up a TICKER on DELL
[12:42] <RHD> The practice here is to determine simply whether DELL is
printing on the B/A or in between
[12:43] <RHD> I know this is very simple but I want to make a couple
[12:43] <RHD> points with how it relates to trading routes
[12:43] <RHD> remember that MM can not use SOES when trading their firms
account
[12:44] <RHD> therefor SN and INCA is there main points when making markets
[12:44] <RHD> if a stock is printing on the "offer"
[12:44] <RHD> and only the offer, bidding the stock is going to be a tough
fill
[12:44] <RHD> bidding using SN also tough
[12:45] <RHD> but a slightly higher chance
[12:45] <RHD> and we move acroos the spectrum from
[12:45] <RHD> bidding to inbetween to offer
[12:45] <RHD> based on where it is printing is the route you will consider
[12:46] <RHD> look at DELL now
[12:46] <RHD> its a mix
[12:46] <RHD> you could bid here on ARCA, ISLD, SN
[12:46] <RHD> and have a decent chance for a fill
[12:46] <RHD> we know we can hit 5/8 all day long
[12:46] <RHD> and now 9/16
[12:47] <RHD> bidding a 1/2 is also a decent fill
[12:47] <RHD> as it is printing there
[12:47] <RHD> something to consider
[12:47] <RHD> is the placements of other ECNs as a stock trades
[12:48] <RHD> keep in mind that an ECN shows "TRUE" size
[12:48] <RHD> this is the case with all BUT INCA
[12:48] <RHD> this is the case with all BUT INCA
[12:48] <RHD> INCA can show lots instead of whole size, but we will discuss
that a bit later
[12:48] <runner> BTRD ??
[12:49] <RHD> the idea here is we join the bid or offer based on where the
prints are
[12:49] <RHD> and our choice of SN or ECN's is also based on
[12:49] <RHD> other ECN's being ahead of us and creating noise
[12:49] <RHD> No there is no "order" to the LVLII but
[12:49] <setneter> what stock are we watching
[12:49] <RHD> there is something to be said about noise
[12:50] <RHD> DELL
[12:50] <RHD> lets get back to theLVLII and Tape now
[12:50] <RHD> so we can apply a bit
[12:50] <RHD> selling here is mixed we can offer out
[12:50] <RHD> ECNS only on offer
[12:50] <RHD> so we would try SN first
[12:51] <RHD> thats the point of what we were just describing
[12:51] <RHD> when ECNs are making moise try SN for 20 secs.
[12:51] <RHD> then you can try ARCA or ISLD to join
[12:52] <RHD> printing still a bit mixed
[12:52] <RHD> and the prints that are on the offer are small lots
[12:52] <RHD> if a MM size stock to buy/sell gettid SOESed for 100 or 200 is
a pain
[12:53] <RHD> so we could probably work our order using a lot of SN in this
case
[12:53] <RHD> now conversley a stock starts printing on the bid or offer
[12:53] <RHD> this is generally a sign or strong buying or selling
[12:53] <RHD> and hence its an all out fight for the best fill
[12:54] <RHD> that is what Joe (our head trader)
[12:54] <RHD> refers to as the "Quick and the dead"
[12:54] <RHD> when that tape print on the offer and there 1000 on each print
[12:54] <RHD> you can assume that those are "automatics" or SOES fills
[12:55] <RHD> and hence the que is filling
[12:55] <RHD> ----------> your dead
[12:55] <RHD> if your late you will never get it
[12:55] <RHD> and that is what happens when every one decides
[12:55] <RHD> to buy at one time from 1 or 2 sellers
[12:56] <RHD> so keep a very close eye on that tape
[12:56] <RHD> It will show you the conviction of the traders
[12:56] <RHD> the routes they are mostlikely using
[12:56] <RHD> and ideas as to the route that you should be using as well
[12:56] <RHD> I hope you all see the power of that
[12:57] <RHD> if your not using those tools together
[12:57] <RHD> your leaving $$$ on the table
[12:57] <RHD> BTW, we will go back to DELL and play in a min
[12:57] <RHD> but first some questions?
[12:57] <Nesi> K
[12:57] <bill> where can we get a list of ECNs and MMs so we can tell who is
who?
[12:58] <bill> oops sorry
[12:58] <RHD> bill, it is on the MBTrading download page
[12:58] <bill> thx, xorry for interruption
[12:58] <RHD> no prob
[12:59] <RHD> well if none, lets get back to trading DELL
[12:59] <Nesi> no questions...
[12:59] <RHD> and apply some new stuff
[12:59] <RHD> I will mak some of the same type of calls and now hopefully
[12:59] <RHD> you will see why I selected a particular route
[13:00] <runner> MM are on what ECN ?
[13:00] <RHD> Example: Buy or Sell 500 DELL
[13:00] <RHD> DELL is a 1000 tier stock
[13:00] <RHD> I pull up my stock and immediatly look at the MM sizes
[13:01] <murf> How do we know that dell is 1000 tier?
[13:01] <RHD> I look at a few of them to determine that its a 10 TIER
[13:01] <RHD> experience, but nasad trader does have
[13:02] <RHD> SOES tier levels, its takes about 5 min or studying to
[13:02] <RHD> determine if its 2 5 or 10
[13:02] <RHD> so lets do a little DELL trading
[13:02] <RHD> buy ARCA or ISLD
[13:03] <RHD> sell ARCA
[13:03] <RHD> buy SN
[13:03] <RHD> remember that when I say buy I am paying the offer
[13:03] <RHD> when I say bid I mean join the bid or cut the spread
[13:04] <RHD> buy ARCA
[13:04] <RHD> offer SN
[13:04] <RHD> buy SN
[13:04] <RHD> buy ISLD
[13:04] <RHD> sell ARCA
[13:04] <RHD> or SEll SN
[13:05] <RHD> sell ISLD
[13:05] <Coyoti> which stock, anyone?
[13:05] <RHD> DELL
[13:05] <_anja> dell
[13:05] <Coyoti> thx
[13:05] <RHD> bid ARCA
[13:05] <RHD> Im moving around due to lack of conviction
[13:06] <RHD> small blocks, just noise
[13:06] <RHD> bid ARCA
[13:06] <RHD> offer SN
[13:06] <RHD> sell ARCA
[13:06] <RHD> bid ARCA
[13:06] <RHD> buy ARCA
[13:06] <RHD> offer ISLD or ARCA
[13:06] <candy> but there's not 1000 on ArCA
[13:06] <RHD> sell SOES
[13:07] <RHD> offer SN then cancel
[13:07] <RHD> and offer ARCA
[13:08] <Smoothy> why?
[13:08] <RHD> sell SOES MKT
[13:08] <RHD> sell SOES MKT
[13:08] <RHD> or sell SN 7/16
[13:08] <RHD> to MLCO that
[13:08] <RHD> is
[13:09] <RHD> sell PREF MLCO
[13:09] <RHD> buy 7/16 PREF GSCO
[13:09] <RHD> offer ARCA
[13:09] <RHD> sell ARCA
[13:09] <RHD> sell SN 5/16
[13:10] <RHD> buy IS:D
[13:10] <RHD> buy ISLD
[13:10] <RHD> bid ARCA
[13:10] <RHD> or BUY SN
[13:10] <RHD> sorry meant
[13:10] <RHD> bid SN
[13:10] <RHD> bid ISLD
[13:10] <RHD> or Offer ARCA then possible cancel
[13:11] <RHD> then sell SOES
[13:11] <RHD> I should mention that a SOES MKT order take priority over a
SOES LMT order
[13:12] <RHD> I used it earlier to try to get ahead of other who may have
had a SOES LMY to MLCO and I wanted
[13:12] <RHD> to take my best shot at it
[13:12] <RHD> sell SOES
[13:12] <RHD> oops
[13:12] <RHD> SELL ARCA
[13:12] <RHD> offer ARCA
[13:13] <RHD> So we see OLDE is a big seller
[13:13] <WOODY> I'm Sorry just joined 5 minutes ago and dont know what stock
you are following
[13:13] <bill> dell
[13:13] <WOODY> thnks
[13:13] <RHD> if we were a buyer we could also consider PREF OLDE on SN at
the current bid price
[13:13] <RHD> he had a lot to sell and we would most likely get a print at
5/16
[13:14] <RHD> now not so likely
[13:14] <RHD> I am watching the tape
[13:14] <Smoothy> So you mean pref OLDE with 5/16 even tho he offered 3/8?
[13:14] <RHD> the prints went from 1/2 bid and 1/2 offer to all offer
[13:14] <RHD> Smoothy, yes I would have tried that first
[13:14] <RHD> WATCH THE TAPE!!!
[13:14] <RHD> the tape tells us the route
[13:15] <RHD> now I am watching the chat room more than DELL but if I were
studying
[13:15] <RHD> I would also know the big buyer as well (if there is one)
[13:15] <RHD> so that I can use SN PREF to help with my orders
[13:15] <RHD> selling here is ARCA
[13:16] <RHD> there were aeveral samll buyers at 5/16
[13:16] <RHD> each route but ARCA would have given me a partial
[13:16] <bruiserm> Do you use about 20 sec to get hit or cancel?
[13:16] <RHD> so I use ARCA so that my order gets worked by multiple routes
[13:16] <RHD> bru, yep
[13:16] <RHD> I dont just hang an order out there, I move with the eb and
flow of the stock
[13:17] <RHD> tape is mixed again
[13:17] <RHD> back to SN
[13:17] <RHD> blocks are small still liking SN
[13:18] <RHD> getting bigger thinking SOES more etc...
[13:18] <RHD> would have to use ARCA or SN here
[13:19] <RHD> still SN and look who the seller is
[13:19] <RHD> we know NITE needed to print stock
[13:19] <RHD> and may still have soem to go
[13:19] <RHD> watch the prints
[13:20] <RHD> we saw SBSH showing 500
[13:20] <RHD> did we see a bunch of 500 prints going off?
[13:20] <RHD> if yes, we know hes getting SOESed
[13:20] <RHD> we can then try ARCA or SN
[13:21] <Smoothy> because we don't want to use soes when the queue is full
right?
[13:21] <RHD> correct
[13:21] <RHD> you can bid here safely
[13:21] <RHD> its deep both ways
[13:21] <RHD> so its your discreation
[13:22] <RHD> so we either bid SN and save some money on comm.
[13:22] <RHD> or buy SOES
[13:22] <RHD> because if we use ARCA we may get a BTRD or INCA fee which in
this
[13:22] <bruiserm> So SOES goes to best bid/ask?
[13:22] <RHD> example would have been a waste as we know
[13:22] <Joel> How do u save money with bid SN?
[13:22] <RHD> we would have gotten our SOES or SN fill
[13:23] <RHD> bru, yes
[13:23] <RHD> Joel, we will NOT get hit by INCA or BTRD
[13:23] <RHD> so no extra charge
[13:23] <RHD> 800 print followed by 500 print
[13:23] <RHD> 2 SOES sells to SBSH and NITE/
[13:23] <RHD> ?
[13:24] <RHD> lost him
[13:24] <RHD> PWJC, sorry
[13:24] <RHD> ok, questions?
[13:24] <RHD> SOES here btw
[13:24] <Nesi> i have few..RHD.. should i post here?
[13:24] <RHD> get aheaqd of those chips
[13:25] <RHD> sure
[13:25] <RHD> eg. buy ARCA here
[13:25] <Joel> Could you compare SOES MKT vs SOES LMT one level above ask,
when you clearly see that you will miss the ask price?
[13:25] <Nesi> <Mort> Question: For an emergency exit, when the stock is
running away from you, what are the best routes? With RT it's hard to change
the route very fast, so you need to have some order prepared in advance. But
this is hard to do, since as you just illustrated, the optimal route can
change second to second.
[13:26] <RHD> Joel, you I believe we will allow you to enter uip to 1/16
below on SOES
[13:26] <RHD> If I will clearly miss and its thin I will use MKT
[13:27] <RHD> if its deep I will cancel and watch
[13:27] <RHD> Mort, true but one should always sbe SOES MKT
[13:27] <RHD> and then the one your most active with
[13:27] <RHD> to bail out does not change my thinking
[13:28] <RHD> I would not use SOES MKT if only ECN's were bidding
[13:28] <RHD> so "what is the fastest"
[13:28] <RHD> ?
[13:28] <RHD> well....liek you said
[13:28] <RHD> it changes every second
[13:28] <RHD> selling to sellers is always going to curl your toes
[13:29] <bruiserm> The L2 order is important only for SOES?
[13:29] <RHD> ill take a couple more if there are any
[13:29] <RHD> <heavy puffs> If beat
[13:29] <RHD> <heavy puffs> I'm beat
[13:29] <RHD> bru, it is the bible for order entry
[13:30] <runner> BTRD does it show true size ?
[13:30] <RHD> yes it does
[13:30] <Smoothy> you mentioned bidding SNET so you wouldn't get hit with
BTRD or INCA fees, is this right?
[13:31] <RHD> yes correct
[13:31] <Joel> Would be great to have an ARCA option 'no BTRD or INCA
please' :-))
[13:31] <Smoothy> hehe
[13:31] <RHD> Ok gang, I need a break. Joel :-)
[13:32] <RHD> I like the "please' part, maybe if we ask nicely
[13:32] <RHD> Anyway. Hope this helps some. I know it is a ton to learn
[13:32] <murf> Thanks
[13:32] <RHD> but go slow, study and experience
[13:32] <candy> Thanks
[13:32] <Lobo> great tutorial, thanks Ross
[13:32] <Smoothy> this is a great help Thanks!
[13:32] <Joel> Thanks Ross for this great class...
[13:32] <RHD> it will come to you
[13:32] <murf> thanks ross
[13:32] <max> thanks Ross great info!!!
[13:33] <Threei> Ross, priceless lessons, thanks
[13:33] <candy> if we study it will come, if we study it will come
[13:33] <Nesi> thanks
[13:33] <_anja> Thanks Ross
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