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

To: Jon Tara who wrote (7272)	3/11/2000 4:55:00 PM
From: Dan Duchardt	Respond to of 18137

Jon, Decimalization, IMO, could push us right into another similar scenario. The infrastructure can barely handle current volume with fractional quotes. Decimal quotes are going to push the systems over the edge. I think it's very unfortunate that people have coupled the separate issues of decimalization and quantization. There is no reason why the representation of quotes cannot be shifted to the decimal system while retaining a reasonable approximation of the existing quantization scheme, such as limiting quotes to a multiples of $.05 for stocks over $10, $.02 for stocks from $5 to $10, and $.01 for stocks below $5 (just examples; I'm not making a case for the exact numbers). The concern about overloading the system is legitimate, and frankly I believe the real motivation behind all this suitability stuff is to reduce the number of trades being executed to a level that the existing infrastructure can support. If the quantization is maintained near current levels, the apocalypse will be avoided. I'm not convinced there is any advantage to anyone to reduce the quantum to a penny, or fractions thereof anyway. Dan

To: Jon Tara who wrote (7272)	3/11/2000 5:18:00 PM
From: Tai Jin	Read Replies (2) \| Respond to of 18137

I'm not sure why you think decimalization will cause major problems. Will there be more trades as a result? Probably not. As for the number of levels appearing on a level 2 display, people will tend to do what they do now: use "round numbers." Sure, there may be penny increments in the first few levels, but after that they'll probably line up in increments of 5 cents or more. I don't see it as a problem. ...tai

To: Jon Tara who wrote (7272)	3/11/2000 6:07:00 PM
From: Threei	Respond to of 18137

Jon, I am not arguing that sooner or later big drop or slow sliding in the market will happen. Nothing goes up forever. Impact of decimalization is quite unclear at this moment, may be it causes major problems, may be it causes minor problems (which I am more inclined to suggest). My main point when it comes to apocalyptic predictions is: yeah, market crash at some point, so what? Market still will be here after crash, nothing will change in general. Some will lose during bear period, some will win... Volatility increases, volatility decreases, it all goes in cycles. In my several years of trading I saw record gain days and record down days, and after some initial shock market was moving again. And history shows the same events in the past. Yes, technology changed many aspects and no, human nature remained the same... There were always traders who adjusted to new wind and those who failed to adjust. I don't think anyone should look at what happens now in the market from the point of view "Trade like there is no tomorrow". There certainly is :) Regards, Vadym

To: Jon Tara who wrote (7272)	3/12/2000 12:47:00 AM
From: ahhaha	Read Replies (1) \| Respond to of 18137

The delayed tape was minor as far as the conditions which caused the crash of '87 are concerned. The public wasn't the driving force that it is today. Then the automation of transacting enabled the institutions to operate discretely without necessarily going to the floor to execute. Off board trades were escalating and were driven by hedging devices and other derived security transactions. Transactions became progressively more artificial. Just like the run on the money post of the Panic of 1907 the machines caused a crisis of confidence in a brief period of time which snowballed recklessly. The blame resides squarely on the computerization of the stock market and the mechanisms that were allowed to exist to exploit the apparent advantage that instantaneous information provides. The institutional traders, floor traders and the specialists were all benefiting from portfolio insurance, the sidecar, the CBOE,CBOT connection enabled by the computer, and all the other devices used to manage risk and guarantee return. When the machine selling persisted because they were programmed to act according to closed assumptions without any provision for non-linear evolution to chaos, the beneficiaries, in particular the specialists, walked off the floor and let market seek its own level which was provided by the latrine orderly marking the print. The specialist effectively has "full faith and credit", yet they took the attitude that the FED wouldn't help them. Actually it was, "I'll play when I make a lot by violating the intent of the rules through computer machinations, but I won't let you hold me accountable for dereliction of duty if I might lose". The market wanted to make them rich by giving them terrific bargains, but as usual, they were too smart and wanted no part of what they thought was the end of the Western World. No J.P. Morgans in that era. Their money was more important to them than the source of it. Colossal stupidity and short-sighted greed and fear among the august professionals proves they are nothing more than hacks and patzers just like the public. This was a small era of small people all of whom have been forgotten. Anyone remember Bob Prechter?