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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: glynrob who wrote (53645)	9/3/2001 4:31:36 AM
From: Bilow	Read Replies (3) \| Respond to of 275872

Hi glynrob; Yeah, every broker is going to be down at times. A serious trader will have at least 3 ways to get in or out of a trade quickly. Typically that would be (1) his primary trading account, (2) a phone he can use to call up the broker (which works even on market collapse days), and (3) a cell phone that is always working. His list of phone numbers to call should include more than just his broker. It should include the "main office" trading desk, and anything else. You have to get the emergency numbers on the non-emergency days, LOL. With that kind of redundancy, the more common problem is not knowing if you're in a trade, rather than being unable to execute one. (I.e. you try to make a trade, but before you get a confirmation, your computer link goes down. Ouch!) But it's not just margin rates and after hours trading. If I wanted to move around $500K worth of AMD I'd certainly want to have complete understanding as to how the order was being presented to the market. That kind of size is what an institution tends to move around. You need an institution type trading account. Either you've got one huge account, or you're putting way too much of your money in one basket, by the way. In any case, the market should be treated a bit as a poker game, you don't want to show your cards to everybody. I don't know if you are aware of how Brown is showing your order to the market. If you just put out a limit order with size that big, you're going to move the market. Daytraders are going to use you as a back stop for short sales just under your limit price. That is, if you're selling at $16.00, they'll put short sell orders at $15.99. If the stock drops, they make a profit, and if your shares start to get eaten up, they turn around and reverse by buying your shares. What you've done is provide them an almost riskless way to enter the trade. AMD did 3.5 million shares Friday, according to SI. Over a 6.5 hour day, that's about 9000 shares per minute. Your order was about 4 minutes volume. I know that 4 minutes doesn't seem like very long to most people, but it is a long time in the market. Try holding your breath for 4 minutes. Try finding out how many trades you can enter in 4 minutes. The guys who are trading against you can turn around a trade in about 2 seconds. Any scalper would take advantage of that kind of size in this kind of a market. If you did the same thing in a stock that was more lightly traded, the tendency of scalpers and daytraders to take advantage of you will increase accordingly. I think you need an account that lets you see ISLD, ARCA and INCA book, place orders there or on through the firm's market maker, and you need a decent connection. Then you can offer shares out in amounts that doesn't attract the attention of people who will trade off of you. The difference isn't much on an individual trade, but saving 6 cents per share on better execution is a couple thousand dollars. I don't know if Brown will let you place orders with something like "best efforts" specified. Maybe they have something like that. As far as margin rates go, a decent broker will let you short stocks with no need to pay margin interest. The margin rates that Brown charges for borrowing to go long seem reasonable, my question would be what they charge you (if anything) for going short. I noted that Brown & Company charges a lower rate for Market orders than for Limit orders: brownco.com That can only mean one thing - they're selling your order flow. In other words, they're making money off of your orders that doesn't show up in the commissions. Essentially, they get a kick back by giving your bad prices to a market maker. Here's what the SEC says about "payment for order flow": sec.gov Also read: sec.gov Now I don't know for sure that Brown receives payment for order flow, but that is the only explanation I know for their charging a different commission on limit and market orders. Market orders are more easily taken advantage of, and that's why they give you a lower commission on them. But (large) limit orders can also be taken advantage of. You really don't want your order flow sold, I think. This is something that should be showing up either in your account agreement or in your tickets. The Nasdaq and NYSE are not the simple markets that they appear to the innocent observer. They are very complicated auction systems, and if you're moving around large amounts of money in them, you will be taken advantage of. Conceptually, the Nasdaq is more like a bunch of people standing around holding up cards showing how many shares they want to buy and sell and at what prices. On the other hand, if you really just don't care about the last few pennies per share, you should keep Brown. And the NYSE is gentler than the Naz, so I really don't have much of a problem with executing big size on the NYSE through a Brown account. But I'd get a better account if I were you. -- Carl P.S. I would guess that trading AMD after hours is a really bad move, due to the wide spreads involved. In fact, I would avoid after hours trading completely, except when events force you into it.