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Strategies & Market Trends : SOES Trading -- Ignore unavailable to you. Want to Upgrade?

To: Jay Morrison who wrote (1205)	1/22/1998 8:32:00 AM
From: George Leeper	Read Replies (1) \| Respond to of 1618

I have just begun to trade at Block in Irvine Ca, the level II screens are terrific and the executions are very fast. You are able to place limt orders or market orders. If you are a scalper you should be able to take 1/4 out of a trade.

To: Jay Morrison who wrote (1205)	1/22/1998 10:47:00 AM
From: Jay Morrison	Read Replies (2) \| Respond to of 1618

I would like to know how most of the traders here are trading? For example, 1) what firm do you execute thru? 2) does that firm provide level II quotes? 3) what is the per ticket charge? 4) are you trading from home or at an office (Block, etc) 5) what are the pros and cons for your current provider? Thanks, Jay (looking for a new setup)

To: Jay Morrison who wrote (1205)	1/22/1998 1:18:00 PM
From: Michael Friesen	Read Replies (2) \| Respond to of 1618

Jay, On the system (Watcher) I traded on, you could do either a straight SOES buy or a "Monster" buy (or sell). The explanation is as follows: If the market is 25 1/4 X 25 3/8, and you do a straight SOES buy, then it means "buy at 25 3/8 limit", so if there were shares available you would get filled at 25 3/8 but no higher. The "Monster buy" on the other hand, put in a market order with a limit at 20% higher - so in this example your computer would be saying buy XYZZ now, and pay up if necessary to approx. $30, but no higher. The advantage of this was that it would put you ahead of all the people who just typed "buy at 25 3/8 limit" - the risk of course is that if the stock was screaming up and you didn't cancel, then you'd get filled much higher, eventually, and maybe you didn't want to pay up too much for the stock. I believe they have now changed the rules so that there is not as much difference between market and limit orders. You might want to ask Steve Goldman on the From the Trading Desk thread these questions, since he's up to date - actually his company has a site at www.yamner.com or something where they have a library of articles on Nasdaq etc. Basically the situation is this: you are not guaranteed a fill, since the system has been changed since 1987 because the market makers didn't like losing money to SOES traders. If a stock is moving up or down fast, you may well not get the price you see when you hit the key. Let's say INTC is moving up, so market makers are dropping off the ask and coming to the bid. In my experience, you better hit the key to buy while 6 or 7 MMs are still on the ask, otherwise you won't get filled. The "good old days" which a longtime SOES trader told me about, were like this: you could wait until there was ONE market maker left on the ask, hit the Buy key, and get the stock, and be virtually guaranteed that you could offer it out at the next level. This is how SOES got the reputation for making 1/8ths or 1/4s with 90% accuracy. Sadly, no more. With regard to trading between the bid/ask: sure you can do it via Selectnet or Island or whatever. But if a stock looks like it's moving up, what market maker in their right mind will sell to you at your bid? The market is filled with people smarter than you and me, so unless you can outthink most of the participants, chances are that you will only get filled between the bid and offer when it is not an advantage for you. Other traders reading please correct any facts I have got wrong, since my experience is from over half a year ago and things change fast. Michael Friesen