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Non-Tech : Datek Brokerage $9.95 a trade
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To: The Vet who wrote (11348)3/26/1999 8:32:00 PM
From: Esteban  Read Replies (1) of 16892
 
Vet, I have a couple of questions about your order entry techniques you were nice enough to share with us.

What I most often do is place a limit order which is just 1/32 or 1/16 outside the marketable price and therefore I get it on to Island immediately. Providing the market is not moving strongly in one direction I usually get a fill much quicker than I would have with an "outside" marketable order that does not go directly to Island.

Why wouldn't this order go to the MM on the inside, since a price outside the marketable price would be a marketable order? And if it doesn't, wouldn't this create a crossed market (where the bid exceeds the ask) and therefore be cancelled? I don't believe Island can publish a bid higher than the current ask offered by another MM. Or do you mean 1/32 or 1/16 inside the spread?

If there is a partial match available eg. You want 1000 shares but there are only 500 showing on the Island book, then put in two orders, the first to match the Island book exactly and the second for the balance. That way you get at least 1/2 your order instantly. It costs an extra commision but that is usually better than getting scalped by the outside MM.

Isn't this the way the order would be handled anyway if you just entered the 1000? Wouldn't Datek execute the 500 on Island and send the rest out? Or do the partial fills only come when no one else is on the inside and Island does not have sufficient shares to fill the entire order?

Thanks for clarifying these points.

Esteban
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