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

To: Eric P who wrote (8281)	5/5/2000 3:51:00 PM
From: brec	Read Replies (1) \| Respond to of 18137

... Let's assume that you want to buy 1000 shares of Hot Internet Stock (Ticker: HOTT). A quick review of your level II display indicates the following offers: NITE....68 1/2......1 ISLD....68 1/2......6 INCA....68 3/4......2 HRZG....69..........1 ... you decide to send an marketable limit order to ISLD to buy 1000 shares of HOTT at a price of 68 1/2. Assuming you place a 'normal' ISLD order, you will instantly get filled for 600 shares at 68 1/2 and your remaining 400 shares will be immediately canceled as it would lock the market with the current inside ask of NITE at 68 1/2. All true. But the cancellation of the partial will occur even if NITE isn't there, i.e., even if the ISLD offer you're lifting is alone at the inside and hence if the balance were left alive as a bid it would not cross/lock the market. This seems to me a deficiency in Island's software. In fact, just yesterday I sent an email to Island making the same point.

To: Eric P who wrote (8281)	5/5/2000 4:24:00 PM
From: OZ	Respond to of 18137

I gotcha. Thanks for the clarification. BUT, what many people do not know is that if you can send an Island order out as a NON IOC order and it will do the same thing as you describe. It will take the available offer, then it will bid the remainder in the Island book up until the current offers clear. At that time it will jump to the bid at that same price for all to see and try to complete the order. Same as you described except the bid IS PUBLISHED. The ability to do this is set by the either limitations of one's software or his knowledge of the software. Most Island limit orders are usually set to IOC by default though. I believe it is important that people use software that gives them the absolute most flexibility in how and when they can trade. I.E. no 5 minute limits, ability to customize ecn executions to taste, etc. Hope this helps, Oswald