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Strategies & Market Trends : From the Trading Desk -- Ignore unavailable to you. Want to Upgrade?

To: Dale Baker who wrote (2855)	4/14/1998 7:33:00 AM
From: steve goldman	Read Replies (2) \| Respond to of 4969

Dale, Great Trade! First off, we all know what a wild stock that IFLY was the past few days, up some few hundred percent in a couple days. The warrants will trade with similar volatility. I was watching that yesterday off and on, and it was wild, even more so because it had been like that the past few. What you left out of the equation are the two most important elements, #1, what the quote (bid AND ASK) and the prints were at the time you got executed on the sell? (not when you got a report but the time that they executed your trade) and #2, does the firm make markets or act as principal or nondiscriminatorily route to such a firm. There are times on the NASDAQ where the market prices change signficantly in very very short periods of time, the kind of stuff day traders dream of (unless you;'re on the wrong side). A few times during the day, I saw that stock move 1/2 points in about 30 seconds. If a firm gets an order to sell something and by the time it hits the trading desk, its 1/4 point above the limit, thats a price improvement per se over the limit, but one the client should be legally entitled to. If fact if the trader in turning to work the order sees it 1/4 bid and fills at 3/16 or 1/8, its illegal. The real poor firms are the ones that sit there and fill you at your limit because "that was the time you hit the button and it was quoted there". (there are no clear lines) That it is so difficult to police is what is bringing in the new OATS system which you can learn all about on the NASDAQ's site. This is a system that will hopefully track orders and execution times, etc. and compare them against market conditions. Like finding a needle in haystack but aleast now there willbe a magnifying glass to help. In the end, understand this. Most firms do not act as agency only. They make markets and act as principal or nondiscrimintorily route to such firms. What does that mean? It means they are trading against you. The trader getting the order makes his/her living on the profit they spread off your order. They are not out their to 'do you a favor'. There is also a limit of 5% that firms can make on your order. So if they had a buyer at 2 1/4 or 5/16 for your warrants, your execution sounds fine. Remember, if the stock was printing at 2 1/4, 2 5/16 when the trade completed your ticket, thats not a good trade, although from your viewpoint it seemed pretty decent. And don't get me wrong, I don't dislike them for this either. Its part of the game. Its their game infact. I just think everyone should know the rules and know what circumstances they are playing under. regards Steve@yamner.com