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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: vegetarian who wrote (4696)	3/10/1998 4:58:00 PM
From: zTrader_77	Respond to of 18691

The computer would process all orders sequentially. If the order was at market, then the program would go thru the list and find the next market order and execute the trade at the previous sale price. If the sale was the first sale of the day, it would use the previous day's closing price. If the order was a limit order, it would go thru the list and find the next market order or matching offsetting limit order and execute the trade at the limit price. If a matching market order or limit order is not found then the program would process the next order but give the "non-executable" order top priority for filling the next and subsequent orders. The program would push the "non-executable" order onto a stack and as each new order is processed, first the program would check the stack from the bottom up and then check other orders waiting in the queue. This way orders are given top priority based on the time the order was received, but yet the order will not be allowed to create a bottle neck if it can not be executed. Then the program would go to the next order in the que and process it. I am a computer programmer and designer and this would be an easy program to write. Here is a system that works, created by the founder of Datek. I don't know how this system works. I copied this from Datek's web site. In 1996, Mr. Citron unveiled The Island E.C.N., which revolutionized the Nasdaq stock market by offering individual investors an unparalleled ability to execute and display their orders. The second largest of five electronic communication networks approved by the S.E.C. for the "display rule," Island matches approximately 30 million shares per day, accounting for approximately 5% of the Nasdaq stock market's daily volume. Mr. Citron has also been heavily involved in the effort to allow E.C.N.s to become qualified as full-fledged stock markets. If the effort is successful, Island will be the first stock market dedicated entirely to the individual investor, providing lightning quick matches, reliability, and fair access for all investors.

To: vegetarian who wrote (4696)	3/10/1998 5:25:00 PM
From: Oeconomicus	Respond to of 18691

The Market Makers act as buffers buying and selling stocks from their own account when there are no buyers and sellers respectively for a stock providing a stable market. MC, Nasdaq MMs are under no obligation to provide liquidity, keep an orderly market, or even answer their phones when there are no buyers and you want to sell. They are buying and selling for their own account, but they are doing so AGAINST you. According to a 1996 Forbes article, less than 2% of Nasdaq trades are crosses, i.e. customer to customer. It is not in their interest to cross trades but rather to buy from me at $50 and sell to you at $50 1/2. NYSE Specialists, OTOH, generally just cross trades (with a computer doing most of them) and are prohibited from trading at the market (selling at the market ask or buying at the market bid) ahead of customer orders. They may, of course, buy or sell between the inside bid and ask to meet a customer limit order. That provides liquidity. The point is that MMs are acting as principals, trading against you on a very un-level playing field. On the NYSE, everyone, except the other customers of course, is acting in an agency capacity. The "opposition", i.e. other investors, do not have access to the specialist's book and do not know where all the outside limits and stops are waiting. Those trading against you, in other words, have access to only the information you have access to. Bob