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Technology Stocks : DELL- DAYTRADERS ONLY -- Ignore unavailable to you. Want to Upgrade?

To: Dan Celestino who wrote (16)	6/6/1998 2:30:00 AM
From: Bilow	Respond to of 36

Hi Dan Celestino; Making the spread may not be as easy as you suppose. Here is a good link. pristine.com (Thanks Skeeter Bug for the link.) Occasionally you will see a stock in a total feeding frenzy and you will be able to buy at the bid and sell at the ask (or vice-versa) incredibly quickly. I once did it with CFON 3 times in one minute. The secret to surviving this is to get in on the "hard" side of the trade. You will know that you are doing this correctly if you are spending a lot more time waiting to get into a trade than you are spending waiting to get out of a trade. But feeding frenzies are exceedingly rare. Amazingly enough, I had a profitable day with DELL today. Also had some excitement the other day. I must have pushed the wrong button and ended up putting up an order to buy 3825 shares of DELL at the ask on the ISLD ECN. I got hit with 3500 shares. Managed to work out the first 1600 shares at a teenie profit, but lost on the others, ending up down $125, and sweating... I usually play 200 shares, as I consider myself a beginner who should not be trusted with a larger position. Commissions at the Seattle Block office are kind of complicated, they depend on how you make the trade. Of course they are computed on each "ticket". A single trade on ISLD (also known as Datek) can result in multiple "tickets". This can get expensive. Typical commissions on 1000 shares would be $15 each way, or $30 round trip. The places that charge $25 each ticket are not going to let you make any money scalping, for sure. Basically I've got four ways of trading, with four different commision structures. Each costs $.0125 per share, plus extra charges. The extra charge are (from least to most expensive): SOES $.72 - used to get in fast at a retail cost, and to screw market makers who are sleepy, but only if you are quick enough to beat the other SOES guys. Good for slow moving stocks when you are willing to pay retail, as this is the cheapest commission. SelectNet $2.00 - used to get out of/into some non-SOES stocks. You can preference a particular market maker, perhaps making it more likely he will do business with you. The other day I sold a stock that had a spread of 3/8 at 1/16th below the ask by using SelectNet to preference a market maker who wasn't even at the best bid. (I knew he had been buying the stock all day long, and when he pulled off of the bid, I figured he was just trying to mess with everybody's mind. Sure enough, 10 minutes later he was back at the bid, and presumably hitting the ask.) ISLD) $3.34 This allows you to make a market, but you can also hit limit orders placed by other market makers, so you lose the spread. Since we have a direct connection to the ISLD ECN, this is the fastest way to guarantee getting into and out of a trade. This is reasonably cheap at 1000 shares, unless the order gets filled in a bunch of little orders... INCA, TNTO, BTRD) $2.00 plus an extra $.0025 per share. REDI) $2.00 plus an extra $.0075 per share. These are ECNs like ISLD, but I can't place visible limit orders, and these take longer to get an execution on, IMHO. In addition, I have to generate a pretty large number of tickets per day or I get a "workstation fee" added on. As to how you choose to enter a trade or exit it, it just depends on the situation. To get into a break-out, you usually lose the spread. To get out into strength, I usually make the spread, as you have a better idea of where the resistance is in level-2. To make a market, one typically makes the spread going in, but might not going out. I find it pretty complicated, but it would be boring to do it any way else, given that you are going to sit there for 6.5 hours watching prices... -- Carl