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Strategies & Market Trends : Pristine Lite -- Ignore unavailable to you. Want to Upgrade?

To: SpongeBrain who wrote (123)	3/23/1999 5:27:00 PM
From: pristine	Read Replies (2) \| Respond to of 163

SpongeBrain; Unfortunately, this format does not lend itself to an exhausted discussion on such a rich topic, but I hope the following guidelines provide some help. 1) SOES is the only obligatory execution vehicle. It's fill rate in fast moving market is sub par (about 29%), but it shines in quite markets and offers the astute trader a way to test which market makers are real buyers/sellers and which are not. There are numerous neat little trading tactics using SOES that I teach to all my private students. While this vehicle has lost a great deal of its muscle, used properly it is still a valuable tool for today's trader. What you should know is that SOES is used for taking the offer or the bid, and its most effective when the market is quite and lacks a lot of movement. 2) ISLD is still the fastest ECN, which is not to say that it is the best ECN. This is the vehicle of choice when bidding for and/or offering stock in an attempt to gain the spread. Aside from maybe INCA, it has no rival in this regard. Of course, when entering a stock with no regard for the spread, going ISLD to ISLD is always the first move a trader should attempt. In other words, if ISLD is posted on the inside offer (ASK) of the stock you want to buy, going through ISLD (ISLD to ISLD) should always be the first course of action. This goes for the reverse scenario. The pros of ISLD are its speed and its massive liquidity. The disadvantages are frequent partial fills, sometimes as small as 1 and 2 shares, and its inability to lock the market (hit the bid or offer if ISLD is not present). 3)TNTO, better known as ARCA (short for Archipelago), is one of the smartest ECNs in our opinion. Not only does it do what every other ECN does, it serves as a secondary Selecnet, if and when all the ECN capabilities fail. In short, TNTO is an ECN and a Preferencing vehicle at the same time. We use TNTO to attack the offer and or bid, often time sending out as many as 8, 9 or 10 orders. These little soldiers start immediately working to get us filled. It attempts to accomplish its "filling" task in the following order: a) It checks its internal order book for a match. If no match... b) It routes to any other ECN at the desired price. If no other ECN is present... c) It goes into "preference mode" and selects a market maker to do business with. If that market refuses the request, it goes to the next market maker most likely to produce a fill. How does TNTO know which market maker to route a request to? It keeps internal stats on all market makers doing business with TNTO and rates them according to their fill history. Now that is very smart. 4) Selecnet (SNET) is the last but far from the least execution vehicle. There are two types of Selecnet orders: A SNET Broadcast and a SNET Preference. The former advertises your intentions to buy or sell a stock to all the current dealers making a market in the stock. Keep in mind that this broadcasted order is only seen by the professionals, the market makers. The public (retail) market is unaware fo SNET orders. The SNET Preference is an individual order sent specifically to a single market maker. You make the choice. This is akin to knocking on a market makers door and secretly asking him to do business with you. Keep in mind that the market maker in either case is not obligated to comply with your request. But if the preferenced market maker refuses, he must lift or leave that price level at which you preferenced him. So, in a sense, a SNET Preference is an alta-matum. It says, "do business with me, Mr. Market Maker, or leave!" There are so many advanced tactics and techniques that are valuable and almost required if one ever hopes to become a master at the art of trading, particularly in this new growing electronic market. What I have given above does not even begin to do justice to this subject. If you are truly interested in mastering the vital art of execution, I strongly urge you to look into one of Pristine's Seminars (call 877-999-0979 or visit www.pristine.com/seminars.htm) Your level of expertise will be greatly improved. You won't be sorry. Of course I'm just a wee bit biased :-). Forever you teacher, Oliver L. Velez