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Non-Tech : CYBERTRADER -- Ignore unavailable to you. Want to Upgrade?

To: rabcat who wrote (2407)	5/1/1999 1:07:00 PM
From: William W. Dwyer, Jr.	Respond to of 3216

Bob, I think Level III is what the marketmakers use, rather than the Level II quote screen we traders have. I believe Level III screens enable them to post their bid and ask prices, etc. This is my understanding. Of course, you know what Level I quotes are. But, I wonder if Warren Buffet maybe has a Level IV screen. Would be big, REALLY big. :-} Bill

To: rabcat who wrote (2407)	5/1/1999 5:53:00 PM
From: JDTrader	Read Replies (3) \| Respond to of 3216

Dear Rabcat: If I said Level 111, it was my mistake. I meant to say Level III (3), which is a very important fact that is unknown to most traders and intentionally left out from the day trading books published by the so called superstar traders who now all own an on line brokerage firms. They keep telling everyone that when the market turns against you, press the SOES keys and dump the unwanted shares on Market Makers. WRONG WRONG WRONG Take a few minutes and look at the trading reports that you receive from your clearing house and see if a MM ever actually bought your shares when the market turned against you and everyone lined up to sell. You will see that it does not happen that often if ever at all. You can buy or sell to MM when you are trading in very liquid securities like Dell or Msft or when the market is not very fast. Level III window is what allows the Market Makers to see all the buyers who are trying to buy or sell and have pressed SOES or select net at a certain price, waiting to be filled. If they see buyers lined up, they simply raise their ASK. They have 15 seconds to either sell at the posted ASK price, raise their price or retrieve their ASK all together. In reality, 15-second limit is never enforced (time them yourself, I have seen 45 seconds). Therefore, they can see where the market is going or at least where the buyers or sellers think the market is going before having to honor their posted offers. What we are forced to deal with is like going to the market and see an ad for a can of coke at 50 cents; you tell the cashier that you want to buy 5 cans; he has 15 seconds to either sell it to you at 50 cents or increase his price to 55. Now if he sees that you really want the cokes or there is a line being made behind you by other customers who want to buy cokes from him, he knows that he can raise the price to 55 cents and still sell the cokes, and sometime to 60; he can sell 5 at 55, 5 at 60 and the rest at 65, so long as those in line think that they are getting a good deal. Moreover, he has nothing to lose by increasing the price so high that customers say they dont want to buy cokes any more because he can then gradually bring the prices lower and sell the cokes at lower prices. IT IS ALWAYS MORE PROFITABLE FOR THE SELLER TO SELL BY STARTING AT THE HIGHEST PRICE ANYONE IS WILLING TO PAY AND GRADUALLY COMING DOWN TO SELL MORE UNITS AT LOWER PRICES THAN TO START FROM THE BOTTOM AND GRADUALLY INCREASE ITS PRICE. Accordingly, market makers are allowed to post a price, get the buyers in and then decide at what price they want to sell their shares based on the size of demand. This is why when the market is moving sharply higher or lower, you wont get filled when you press SOES. They keep adjusting their prices and your offer to buy or sell falls on its face. Unfortunately we have no way of fighting the market makers in that we are not united and have no voice. The only market force that works on our side and indirectly benefit us is the increasing popularity of electronic clearing systems like Island and ARCA, etc. When you send an order to Island, you dont have the luxury of sitting on your order for 15 seconds to see where the market is going. If market makers post a price, they should be accountable to either buy or sell at that price. After all, why the big market makers need to have protection and extra leverage when they are dealing with small players like us. As you see Market Makers are not geniuses; they simply have better tools, deeper pockets and lobbying power. If you take the level III windows from them and force them to offer at least 500 or 1000 shares at each price level, instead of 100 that they are presently required to do, you will have more realistic prices, a far more liquid market with less volatility. That would also take care of this crazy business of 25 to 40 points daily range in some of the more popular stocks to trade. Sadly enough, if it is true that about 90% of day traders lose money, guess who is taking the day traders money. Good luck to you all trading