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Real Time Execution Training
********************************************** <Threei> Let's do our traditional Friday real time execution class. <Threei> One thing I am going to add from now on: <Threei> besides all usual routes we discuss <Threei> we will also look how to route order assuming SuperSOES is into effect. <Threei> We don't know all the details of it yet <Threei> so actual methods of using it might be slightly different <Threei> but I want us to start getting used to it. <Threei> First stock for today: <Threei> SAPE http://www.realitytrader.com/shots/sape.gif <Threei> As usual, let's start with execution risk evaluation. <Chris> Send questions for this stock to Chris <Threei> For trialers that are not aware with this kind of classes: <Threei> when we discuss risk <Threei> we are talking about EXECUTION risk, not risk of the trade. <Threei> i.e., what kind of damage you can expect if stock turns against you and you want out as soon as possible. <Threei> So, risk evaluation for SAPE: <Threei> SOES tier size is 1000 shares, <Threei> spread is tight, 1/16, <Threei> gap between level is tight, <Threei> decent particpation on most levels, <Threei> sizes shown are not real big but still decent. <Threei> I would evaluate risk as moderate. <Threei> How to route your order if you want to buy it here? http://www.realitytrader.com/shots/sape1.gif <Threei> If stock is calm, SOES would work OK for 1000 shares. <Threei> GSCO has 1000, NDBC 400. <Threei> If there are prints at the offer, I would not go with SOES <Threei> and rather hit ISLD and INCA <Threei> using either ARCA or REDI buy at the offer. <Threei> One more option is: <Threei> SNet PREF to GSCO. http://www.realitytrader.com/shots/sape2.gif <Threei> If SuperSOES is in effect, <Threei> what options do we have now, after uptick? <Threei> Small sizes shown by MMs <Threei> 100 shares each. <Threei> If they have reserve http://www.realitytrader.com/shots/sape3.gif <Threei> our SS (supersoes) would be OK <Threei> but if not - those 200 shares would be all we could get <Threei> and only if our order was first in the line. <Threei> Now after next uptick: <Threei> either only MMs <Threei> and 300 shares from INCA <Threei> SS is the only option. <Threei> ISLD joined, hit it <Threei> Remember: <Threei> SNet won't really work for you <Threei> after SS is launched <Chris> Send questions for this stock to Chris <Threei> Yoo will be able to use it to reach ECNs <Threei> but with MMs, it's just request with no response required. <Threei> When you see ECNs only at the price you want <Threei> you don't use SS at all <Threei> as ECNs don't participate in SS. <Threei> They can get hit via direct ECN connection or via SNet PREF. <Threei> MWSE will participate in SS <Threei> so it will be soes eligible, unlike now. <Threei> To sell it: <Threei> 400 shares form ISLD http://www.realitytrader.com/shots/sape4.gif <Threei> 1000 INCA <Threei> ARCA or REDI <Threei> to hit ECNs, <Threei> or INCA direct <Threei> Just 600 shares by MM NITE <Threei> Not good for soes <Threei> assuming we play 1000 shares. <Threei> With SS, <Threei> I would sell it using sell at 3/4 <Threei> hitting NITE for 100 shares at 13/16 <Threei> and SLKC at 3/4 for 900 more <Threei> or, <Threei> INCA direct sell at 3/4 <Threei> if NITE gets out faster than I can hit it. <Threei> Remember one more thing: <Threei> when SS is in effect http://www.realitytrader.com/shots/sape5.gif <Threei> you will know that MM has no reserve if he shows less than 1000. <Chris> Send questions for this stock to Chris <Threei> If he shows 1000, he might have reserve size or not, <Threei> but if he shows less - there is no reserve. <Threei> For instance, NFSC at the offer <Threei> with 100 shares. http://www.realitytrader.com/shots/sape6.gif <Threei> Today we don't know if it's 100 or any amount buyers are willing to take. <Threei> When SS is in effect we know there is no reserve if he has 100 shares shown. <Threei> any questions about this one? <Chris> None <Threei> OK, next one: <Threei> MCLD http://www.realitytrader.com/shots/mcld.gif <Threei> Risk evaluation is pretty similar for this stock <Threei> The only difference is <Threei> sizes shown by participants are bigger <Threei> and this makes stock safer execution wise. <Threei> I would say, <Threei> risk is low to moderate. <Threei> How to buy it? <Threei> SOES if stock is quiet. http://www.realitytrader.com/shots/mcld1.gif <Threei> ARCA or REDI or INCA direct <Threei> to take shares from ECNs. <Threei> ISLD now <Threei> With SS: <Threei> there are enough MMs <Threei> to send it <Threei> plus you can still go with all ECNs routes mentioned above. <Chris> Send questions for this stock to Chris <Threei> Just don't try to pref NITE or AGED <Threei> as it: <Threei> 1. requires from you to send order exceeding their amount shown by at least 100 shares <Threei> i.e., 1600 for NITE <Threei> or 1100 for AGED <Threei> and 2. doesn't oblige them to do anything anyway. <Threei> Soak this change: <Threei> SNet PREF against MMs won't be really an option for you. <Threei> To sell it: http://www.realitytrader.com/shots/mcld2.gif <Threei> only ECNs ate the bid <Threei> so no SOES <Threei> and no SS <Threei> Just hit BRUT directly <Threei> or ARCA, REDI <Threei> would do the job hitting all ECNs at the bid. <Threei> Now MM joined, http://www.realitytrader.com/shots/mcld3.gif <Threei> shows 1000 shares, <Threei> SOES and SS became an option again. <Threei> Any questions about this one? <Chris> 3i Where can we read about the specifications for the new Super SOES <Chris> <_Jeff> <Threei> I gave 3 links last Friday <Threei> Let me dig them out after class <Chris> no others Threei <Chris> Thanks <Larisa> <_will> Why do we have to exceed amounts by 100 shares for pref nite or aged <Threei> Closer to SS launch date we will have one more class <Threei> with more details on new routing systems. <Threei> will, that how SNet gets modified when SuperSOES enrolls. <Threei> They want SNet to be non-mandatory system <Threei> So, their solution is: <Threei> you want to negotiate with MM - do so, <Threei> but you can't MAKE him fill your order using SNet, <Threei> only SS is mandatory. <Threei> So, <Threei> if he shows 1000 shares <Threei> SNet should be 1100 minimum <Threei> so he would have an option to decline your order as not matching to his amount of shares. <Chris> No more from my end Vad <Threei> Wanna make him - hit him via SS and hope you are not in the end of the line. <Threei> OK folks, thanks for your attention <Chris> This room is now unmoderated. Everyone may speak again. <Chris> Thanks for the comparison Threei <Threei> Ask anything you want, I am still here :) <Chris> Gets our members ready for changes. [13:04] <Threei> As we promised, we start to prepare you for this animal [13:04] <_Jeff> 3i Does the time to respond to an order change in the new system? [13:04] <BillyD> 3i...will SS have different tier sizes? [13:05] <Chris> tier sizes are gone [13:05] <Threei> yes Jeff [13:05] <Cliff> geez, SS sounds like "junk", [13:05] <Threei> 5 seconds instead of 17 [13:05] <Threei> hah Cliff [13:05] <_Jeff> still too long :-) [13:05] <Threei> that's what I said when it was presented first time [13:05] <Chris> Billy you can enter an order up to 999,999 shares I think on SOES :) [13:05] <Threei> Yes Chris [13:06] <Chris> Vad, you have those links? [13:06] <Cliff> I mean selectnet today is great compared that..... [13:06] <Threei> but there will be some limitations for small caps [13:06] <Chris> I can't dig them up for some reason [13:06] <BillyD> Chris.....what does the MM have to fill on SS....whatever they show? [13:06] <Chris> you can enter = will be able to [13:06] <Chris> right now we still have tiers [13:06] <Chris> yes BillyD [13:06] <_Jeff> 3i does this mean that the sizes shown will have more meaning? [13:07] <Chris> and if he shows 1000, you have access to his reserve [13:07] <BillyD> thx Chris [13:07] <Threei> somewhat Jeff [13:07] <Threei> still not in full [13:07] <Cliff> so If I want to buy 500 share from a MM showing 1000 shares,,, i cant SS him? correct?, since I must SS him 1100? [13:07] <Threei> but at least, no way to sit at the offer with 100 shares forever anymore. [13:07] <_Jeff> that helps [13:07] <Threei> no Cliff [13:07] <Threei> you can SS whatever you want [13:08] <Threei> 1100 is for SNet [13:08] <Cliff> oh, right, sorry, confused [13:08] <_Jeff> is there a 5 min rule in SS [13:08] <Threei> no [13:08] <Threei> OK, links for SS info [13:09] <Cliff> so SNet will become like SOES, not used by anyone..... [13:09] <_Jeff> so you ss the mm to death? [13:09] <Chris> except to ECNs cliff [13:09] <Threei> http://www.nasdaqtrader.com/trader/hottopics/supersoesquickref.pdf [13:09] <_Jeff> can [13:09] <Threei> http://www.nasdaqtrader.com/trader/hottopics/supersoesguide.pdf [13:09] <Threei> http://www.nasdaqtrader.com/trader/hottopics/ssoesfaqs.pdf [13:09] <Threei> http://www.nasdaqtrader.com/trader/news/WebCast/webcastssubhome.stm [13:10] <Chris> again, how it works is just based on what we read and what we know from the trading the market currently...actual practice will confirm our thoughts when the final product is launched [13:10] <_turgeon> when will that be? [13:10] <Threei> Jan 22 [13:10] <Chris> and we will adjust to the system and allow these classes to help you adjust faster than you would anywhere that isn't teaching this [13:10] <Threei> unless postponed again [13:10] <_turgeon> oh.. quite soon [13:10] <Threei> and if it gets postponed [13:10] <Threei> I will be last person to cry [13:10] <Chris> this is 4th postpone I think [13:11] <Threei> Besides, Jan 10 SEC is voting on Supermontage [13:11] <Threei> So, they keep us on our toes :) [13:12] <_Jeff> 3i So you can do multiple SS buy orders without regard to time? [13:12] <Threei> yes Jeff [13:14] <_turgeon> how is this change in SNet going to affect ARCA? [13:15] <Chris> if MMs are there only [13:15] <Chris> wouldn't use ARCA [13:15] <Chris> if plenty of ECNs at the level you want [13:15] <Chris> then ARCA still would be good route to use [13:16] <_turgeon> ugg.. dont like that [13:16] <Chris> anything that uses SNET feature will be worthless if ECN participation is not there [13:16] <Chris> let me say : [13:16] <Chris> will be = should be [13:17] <Cliff> so there wont be one route to which can try to hit ECN's and MMs like Redi and Arca [13:17] <Chris> ARCA will still work if ECNs are there [13:17] <Chris> or REDI [13:17] <_turgeon> this really stinks [13:17] <Threei> there is one unclear thing: [13:17] <Chris> but how it works being stuck on the MM PREF I'm not sure how ugly that will be [13:17] <Cliff> right, but they wont continue to hit for MM's [13:17] <Threei> how ARCA is going to be reprogrammed. [13:17] <Chris> right Threei [13:18] <Threei> If it starts to go SS if no ECNs, then it still will be universal route. [13:18] <Threei> We will know it soon enough guys. [13:18] <Threei> We have MBT representatives in the room, [13:18] <Chris> We've been through changes before and have adjusted [13:18] <Threei> they will keep us informed [13:18] <Chris> we'll continue to do the same with this [13:18] <Cliff> oh, well, you know they'll reprogram it as such, or you would think to keep biz [13:19] <Chris> don't fret turgeon..we'll be here through the adjustment period to help everyone along as we figure things out [13:19] <Chris> :) [13:19] <_Jeff> thanks for the links 3i [13:20] <Threei> sure :) [13:20] <Threei> That was quite interesting to watch [13:20] <_turgeon> maybe the ECNs will allow themselves to be Super SOESd [13:20] <Cliff> thanks chris and 3i, [13:20] <Chris> this was an issue [13:20] <Threei> how traders perception changed in a course of discussion of SS. [13:20] <Chris> so far they have not elected to join [13:20] <Chris> the ECNs showed interest [13:20] <Chris> but decided against it [13:21] <Threei> I participated in this discussion on SI from the very beginning [13:21] <Threei> and was one of not many skeptics while mnay were quite enthusiastic. [13:21] <Threei> As discussion was going, [13:22] <Threei> more and more traders changed their mind about SS as the best thing after sliced bread. [13:22] <Threei> MM posting on SI [13:22] <Threei> told his impressions after one of tests. [13:23] <Threei> He sounded quite grim. [13:23] <Threei> I wouldn't agree with his evaluation, [13:23] <Threei> he went too far in his pessimism, IMH(S)O [13:23] <Threei> but the fact is, [13:24] <Threei> it's not going to be the system we all dreamed of. [13:24] <Cliff> sounds MM biased to me, ..... [13:24] <Threei> Hard to tell Cliff [13:24] <Chris> Well, SNET was intended to be a negotiation system from the beginning. [13:24] <Cliff> not to be a conspiracist.....hehe [13:24] <Threei> it looks to me like they won't be too happy with some of features too [13:24] <Chris> So going back to this isn't much of a shock [13:24] <Threei> Not fun to get hit every 5 seconds [13:25] <Threei> and make decidions with such a pace. [13:25] <golden> Who created Super Soles [13:25] <Threei> NASDAQ did [13:26] <_Jeff> it should be simple if they want sell offer and if not don't offer [13:26] <Threei> yeah, but you know how trading on fast stock goes. [13:26] <Threei> It's not like you have all the solutions. [13:26] <Threei> Situation changes. [13:27] <Threei> And you change your act with it. [13:27] <Threei> Under SS, you will have to do it much faster as MM. [13:27] <Threei> As od now, [13:27] <Threei> od = of [13:27] <Threei> you have an option to get some additional time [13:28] <Threei> putting 100 shares [13:28] <Threei> and not risking much while traders can't do anything about your tiny offer. [13:28] <_turgeon> The most promising thing to me, seems to be that MMs wont be sitting with 100 shares at the bid or offer.. [13:28] <Threei> Under SS, you can't. [13:28] <Threei> Trade or get out. [13:28] <Threei> Overall, [13:29] <_Jeff> I like that part [13:29] <Threei> SS is going probably to lead to increased volatility [13:29] <Threei> and it's demanding for all participants. [13:30] <Chris> back in a few gang [13:30] <Chris> Great discussion, thanks for participation gang. [13:31] <_Jeff> Is this new system going to change the way ecn's work? [13:31] <Threei> no [13:31] <Threei> they elected to stay the way they were ************************************************************* DISCLAIMER: All material herein was prepared by GST Capital Group LLC. and its affiliates (the "Company") based upon information from sources believed to be reliable. The information contained herein is not guaranteed by the Company to be accurate, and should not be considered to be all-inclusive. 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