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Strategies & Market Trends : DAYTRADING Fundamentals
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To: Eric P who wrote ()6/5/1999 2:03:00 PM
From: Eric P   of 18137
 
Daytrading NYSE versus NASDAQ Stocks

Nasdaq Advantages:
1) Fast executions on ISLD
2) Ability to see Level II data for depth of market
3) Ability to trade after hours using ECN's

Nasdaq Disadvantages:
1) SOES useless in stocks that are moving
2) SNET useless in stocks that are moving
3) ISLD trading can result in partial fills (7 shares, etc)
4) Market makers only showing firm quotes for 100 shares
5) 17 second delay given to MM's before they must update quote
6) Even if alone at the inside bid/ask and multiple executions take place at your price, you won't necessarily get filled, as payment for order flow brokers simply fill their orders by matching your price.

NYSE Advantages:
1) The NYSE exchange specialist is forbidden from executing an order for himself in preference to filling an existing limit order on his book (i.e. from a customer).
2) Your limit order has equal standing with all other limit orders on the NYSE book. No bypassing your order on NYSE, orders filled based on order entry time.
3) You will never get filled with 7 shares out of a 1000 share order!
4) The stocks move slower and may be more easy to predict direction.
5) The posted quotes are 'real', and therefore give you a realistic hope that they can be executed against (i.e. no 17 second phantom MM)

NYSE Disadvantages:
1) Order executions can be much slower due to the trade being filled manually by the specialist using the SuperDOT system, typically 10-60 seconds (sometimes longer)
2) The specialist does not have to show the full size of the bid/ask on the book.
3) Payment for order flow firms can bypass your limit order on the NYSE book by executing their customer trades for themselves on regional exchanges.
4) Lower volatility means less movement and thus less profit potential for 'perfect' traders.
5) No ECN's mean larger spreads.
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