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 : Trading For A Living -- Ignore unavailable to you. Want to Upgrade?

To: Jim Burnham who wrote (1515)	3/31/1999 9:26:00 PM
From: Eric P	Respond to of 1729

Jim: I found that these problems with SOES and SelectNet tend to occur in the active, volatile stocks that are best for daytrading. I first attempted to convert my 'successful' paper trading momentum strategies by using the SOES system. No dice. You get filled only on losing trades (slight exaggeration only). Then, I programmed my own 'ARCA' type system to automatically route my order to whichever market maker was at the inside ask, with preference given to ECN's and the highest preference given to ISLD. After a substantial amount of work, my results were very disturbing. The last straw was a trade that made a $625 profit on paper. In actuality, I preferenced 9 inside ask market makers in sequence before finally getting filled 90 seconds later with a 3/8 point slippage from my intended price. Ten minutes later at my exit point, I had to sequentially preference 5-7 inside bid market makers before finally getting filled with another 9/16 point slippage. This was all it took for me to learn my lesson. Never again! Typically, the market makers at the inside ask have no intention of filling your order in a rising market. This probably is not news to most of you, but maybe this will help a few new traders out there. As you mention, there may be some sense in repeatedly placing SOES buy orders in a fast rising market for 100 shares, then, when you finally get a fill, quickly reverse by selling short 1000+ shares. This, as you say, might be a good way to take advantage of this situation that seems to be heavily slanted away from us individual traders. Good idea! -Eric