Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: steve goldman who wrote (3464)	8/10/1998 3:22:00 PM
From: steve goldman	Respond to of 4969

Someone sent a private message regarding short sales on the NASDAQ and how a stock could open at X, trade at various prices all the way down to x-1 before getting filled. First off, let me suggest you take a look at the NASDAQ's two sites, nasd.com and nasdr.com and search around for rules on short selling. This will give you the legal standards but not how it practically Translates into execution quality. Selling short has certain regulations which must be adhered to in executing a transaction. While the NYSE follows an uptick rule, the NASDAQ adheres to an upbid rule. An upbid is a bid which is greater than a prior bid or equal to a prior bid which itself is an upbid. Thus, if you enter an order to sell a stock short at the market, most firms will route the order to a market maker or other dealer that will handle the order, and you will hopefully get filled at the first upbid, if the bid is of sufficient size to be hit. Lets say the stock opens 10 x 10 1/4, the ten being a down bid and this is what times and sales then looks like, most current towards the bottom: 10 (downbid) x 10 1/4 100@10 200@10 1/8 9 7/8 x 10 1/4 200@9 15/16 300@9 7/8 9 3/4 x 10 100@ 9 3/4 200 9 13/16 9 13/16 x 9 7/8 Most firms do not have to represent your market order as they would then be required to adjust it all the way down, rather they wait for the first upbid and that would be your fill, IF, they were able to sell the stock on that bid. If the bid stepped away, you may or may not get filled. You can clearly say that the prints inbetween or on the offer were acceptable, compliant prices, but the firm is not representing your order, all the way down as it drops. What we (Yamner) do, what online direct trading investors and what you should do is use an ECN, some quick system that lets you present an offer, to offer the stock up in between, ie. When it is 10 x 10 1/4, offer it at 10 3/16, as it adjusts if noone takes your offer, then continue to adjust quickly your offer (on one hand you are weakening your own stock as you continue to make it weaker andweaker with lower and lower offers).nonetheless, if you don't offer, you can sell it. Continue to adjust and then, at very worst, if an upbid steps in, hit that bid. Most firms, the Egroups, etc. route to mm that do not work your order like this. Infact, they may sell it out of inventory depending on short sale rules, at higher prices, be short/negative in their firm account as it falls and simply take in your stock at the first upbid. My feeling is that if you are working your own orders with a direct order firm like MBTrading or Cybertrader or using a firm that works your orders for you, like Yamner & Co., Inc., you should try offering pieces in between because you have nothing to lose. For those that use internet trading or firms that non-discriminatorily route to mm, be careful with those short market orders. At very least, offering stock in between is better than twiddling your thumbs waiting for an upbid.