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To: TFF who wrote (4625)	7/8/1998 9:30:00 PM
From: Eric P	Respond to of 12617

Excellent point regarding difficulty of executions. I think most peoples experience with market orders will probably match mine: In hindsight, your best trade decisions will be the ones that do not get filled. When your timing is not so good, you will invariably get filled every time. Coincidence? Not likely. I have concluded that this is a fact of life based on the Nasdaq rules. It is no secret that Nasdaq is essentially run by the market makers. As such, their rules are heavily slanted towards benefiting the market makers. A particularly advantageous rule for the market makers is the 17-seconds that they have to update their quotes after being hit with an execution. In this computerized world, this is an outdated rule which should be eliminated. Once a market maker is executed against, his/her quote should: 1) Be immediately available for another execution, or 2) Removed entirely from the market and given 17 seconds in order to re-establish a new price. Instead, the market maker is currently allowed to merely sit at his/her current quote for 17 seconds and clog up the works with absolutely no intention of filling an additional order. This enables the market maker (or their computer, to be exact) to monitor the movement of the stock / sector / market for up to 17 seconds prior to decided whether to fill additional orders or to back away from their quote. You can bet that the market maker will back away from his ask when there is a large accumulated queue of SOES orders building up. Filling these orders would be foolish, as the price would likely rise from the strength of these orders alone. However, if there is only one or two orders in the SOES queue and market makers are beginning to back away from the bid, the market maker will likely fill these SOES orders before the price drops a level. In this way, the market maker is able to ensure that he/she only fills SOES orders that provide an expectation of gain, and backs away from SOES orders that likely will be followed by a subsequent move against the market maker. Don't misunderstand my point. The market maker is obviously entitled to be able to make decisions to maximize their profits. However, the 17 second rule gives the market maker 17 seconds to sit on your order before deciding whether he wants to execute against it. Think how nice it would be if we could place ISLD orders, then when a matching order is paired with our order, we could wait 17 seconds to 'change your mind' and skip the trade. This is a great advantage that the market makers have, and an unfair advantage IMO. This results in greater difficulty filling promising trades, while the dogs almost always get filled. Does anyone have the answers to the following related questions? 1) Do the market makers have access to the number of SOES orders in the queue? Or is this confidential information maintained by the Nasdaq system administrators? 2) Does the Nasdaq system ensure that the market makers on the inside bid/ask take an execution at least every 17 seconds? Or is this done more on the 'honor system' by the market makers, without careful scrutiny? 3) How will the proposed new Nasdaq system, replacing SOES/SelectNet deal with this problem?

To: TFF who wrote (4625)	7/8/1998 11:52:00 PM
From: _aj	Read Replies (1) \| Respond to of 12617

In my opinion, getting filled on the way out is far more important....missing a fill on a buy only leaves you out of a trade instead of stuck in a sinkhole. Getting filled on the way out begins with the purchase. Pay close attention to the LII situation before entry (and through the trade). Pass on any trade that does not offer significant support at 1/6 or 1/8 below your entry point unless you are fully prepared to accept a large loss on a downturn. If the trade moves against you, get out at once...do not wait until all of the marketmakers have pulled off of the bid. Remember that soes is often the best way out if most of the bidders are MMs, but often isld or inca work better on fast movers. I have 1000 share soes, isld and inca hot keys set up for buys and sells. Thus, when in a trade I am ready to choose the system that works in the situation at a keystroke. If there are a few MMs at the ask on a stock you feel is beginning a strong move you can be pretty sure that unless the move doesn't happen (and the MMs stay at the ask) you will not be far enough up in the queue to get the stock. Often the trader will follow the stock up, always trying just a little too late to get in at the ask. Rather than use a market buy (which I almost never do), I would look at the LII. Are there 1000 shares on isld 1/16 over the ask? You're probably not going to get in at the ask anyway, so consider grabbing those shares (using selectnet). There's no question that getting fills on moving stocks is difficult. That's just a fact of trading. But, Irby hits it right on the head...you must be comfortable with the various execution alternatives. Be ready to use inca, isld, or whatever else gives the best chance of success.

To: TFF who wrote (4625)	7/9/1998 8:52:00 AM
From: steve goldman	Read Replies (2) \| Respond to of 12617

Irby, Good post and yet I don't think there is anyway you could capture in a few paragraphs exactly what makes up good trading. Forget the idea of a two sided event...ie..did you buy zyx at the bottom..look at each transaction in its ownright...buy side strategy and sell side..forget what you paid for something once you have bot it. Once you've set your limits/stops (which are critical) you need to execute, that is perform well in a very active, moving market. "Your skill in selling into strength, or buying into weakness." There is a tremendous amount in what comprises skill. ..re:". If the stock is falling through the floor or going through the roof,you probably won't get filled!.....That's why it's moving so fast!...no resistance". I agree its difficult, but thats why trading isnt for everyone. You have to do the best, perform well, in the most tenuous environment. Your focus on #1 is absolutely correct yet i would modify it as such. Sell into strength and and buy on softness but also understand that strong gets stronger and weak gets weaker, so know that you sell something, it very likely will move higher, and you buy something on weakness, you very likely might see it lower. Also, if you own something and its tanking, you'd better know how you will exit the stock you dont stand around like a deer in headlights. You buy something on weakness and it starts really pulling back, you had better know how you are going to get out well. There are two components two good trading:1. the selection and timing and 2. the execution. Some are wonderful at 1 and bad at two. Some look for help from others in 1 and take 2 on all themselves. Some do it the other way. Stop orders to limit losses are good to protect yourself from losses (keep away from whole numbers as thats where the average investor places them and it accelerates through them). There is also a lot quirks and offbeat skills/tips you can pick up. one, for instance, I'll use on last few days of option expiration, a few issues might involve selling options instead of the stock in a bad market for stock. Sometimes the bids on options might be better than stock andyou might do better with the option than stock....ie...bid tanks on abcd, sell some in money calls, because on RAES with 10 lot auto execute can get 'SOES' like on the options which might be an 1/8, 1/4 or 1/16 better. Maybe I use this once a month, a few trades, but it adds up. If anyone's interested in specifics regarding execution systems or scenarios, present them,and we can discuss them. The Trading Desk Thread is good for this also...http://www.exchange2000.com/~wsapi/investor/Subject-15612 As I said, there is so much to trading, trading skills, tips, etc. Anyone interested in this kind of dialogue, strongly consider joining our chat session this sunday on our chatsite..http://www.yamner.com/newuser.html This SUnday, 6pm, est. Ross Ditlove from MBtrading will be joining me as guest speaker. Regards, Steve@yamner.com