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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: Dominick who wrote (4434)	9/26/1999 11:42:00 AM
From: LPS5	Respond to of 18137

"Clearly erroneous trades" are those which are away from the then-current inside market, but whether or not they are broken on ACT depends to some degree upon the volatility, spread, and other factors regarding the particular issue and characteristics of the particular trading session. In my experience, while I've seen NASDAQ Market Operations permit trades 1 point away from the inside (in extreme, volatile circumstances), the rule of thumb at the trading firms I've worked at and managed has been: 3/8 away or more and you can expect it to be broken. Good luck in your trading, LPS5

To: Dominick who wrote (4434)	9/26/1999 6:50:00 PM
From: Bilow	Respond to of 18137

Hi Dominick; Re that trade 10 points away from the money in your favor... The natural human instinct in this position is to do exactly what you tried to do, that is get out with a profit. I know this is the normal instinct, because it has happened to me. But since the entry to the trade is subject to cancellation, this is not the correct way to handle the trade. When you are unsure of whether the entry is going to be cancelled, you must make sure that your "exit" is at as good a price as possible. In other words, don't just immediately try to sell the shares at the best offer. Instead, offer the share at about the highest price you think you can get. The best thing to do is to try and do nothing until the time has passed when the counterparty can cancel the trade. This is 30 minutes or one hour, depending on the time of day, according to the Nasdaq Trader manual, but that is for notification to the Nas, notification to you might be delayed. If someone sells you a stock way too cheap, and you sell it for a profit, and then the buy is cancelled, you will suddenly discover yourself to be short, possibly with an illegal short entry. This is why one wants to be sure to exit the trade as well as possible. -- Carl