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

To: Mark Davis who wrote (13490)	8/12/2001 12:22:47 AM
From: LPS5	Read Replies (3) \| Respond to of 18137

How do you know "no one" does stuff like that? And who's "we"? Jeez, guy, I wouldn't go that far. I'm sure that it takes place among the touting promoters, insiders, and related parties to certain penny stock issues that trade not only so thinly as to be joked about as 'trading by appointment,' but also only over the phone. But where is as detailed an electronic paper trail as in NASDAQ issues? "Tape painting"? Possible, yeah, but very unlikely, IMO. Far too blatant. That is...of course...unless you're suggesting that regulators that audit those records are somehow "in" on whatever it is you're hypothesizing? As for spreads, though...you're projecting your daytrading experience on an activity with which you have no experience. Spreads are overwhelmingly a retail, order entry market participant's concern, not having the economies of scale (low, or in some firms no, transaction costs), the internal liquidity (a customer order book), or the ability to cut them other than by using ECNs, all of which incur a cost, however small. If a stock dealer has an order, the spread becomes a source of the dealer's profit (however small, these days) when worked on a principal and/or not held basis, and are the customer's cost when worked on an agency and/or not held basis. On the other hand, if the dealer was trading for the firm's account, what does the spread matter? It doesn't. If there is a compelling enough reason for which he or she wants the stock and he doesn't want to trade time for opportunity, he's going to hit/take it instead of bidding/offering for it. What is it specifically that "looks like" someone hitting or taking "themselves" or a "related account"? By related account, what do you mean? Are you suggesting that dealers trade more than one large, inventory account? Think it might be a customer (a "smart call" or "fast money account") trying to pick its' dealing firm off by sending marketable bids or offers into it via ACES that - via the automated order handling rules present in the most common software platform on the Street - move the firm quote to the inside instantly...which the increasingly frustrated trader probably chooses to principally execute rather than display? It's a real pain when for 20 minutes or so, a large hedge fund who's also watching Level 2 fires 500 or 1000 share orders at you every 2 minutes or so that spring your quote to the inside - especially if you have other orders you're working in that and other issues. Worse yet if it's happening on both sides, whether from the same or different customers. Can cause some real jostlin' about at the inside market, you know. And incidentally, that's the exact phenomenon that keeps market making firms from offering Auto-Ex capabilities to daytrading firms, at least for any prolongued length of time. That'd be my bet, but I might be wrong. :) LPS5