An NYSE Scalper's Tale - A Trader's Diary

Tuesday, September 05, 2006

Burning Up The Keyboard

Gross: +$384.98
Net: +$86.15
Loss From Top: $104.12
Trades: 194
Shares Traded: 273400

Stocks Traded Today (net profit/loss):
Exxon Mobile (XOM): +$183.54
EMC Corp (EMC): +$109.61
Home Depot (HD): +$56.07
Corning (GLW): +$29.45
Hewlett Packard (HPQ): +$5.55
Citigroup (C): -$2.71
Ford (F): -$18.87
Advanced Micro Devices (AMD): -$75.38
Motorola (MOT): -$90.03
Walmart (WMT): -$111.08

As with all other beginnings of the month, today I played around with some new strategies and tried some things that I would not normally do.

Today, one of the things I tried was getting into a position larger than what I would normally use - especially with the thinner stocks.

Another was entering large positions in increments of 1000 shares at a time...as an example, if I was trading Ford, instead of trying to get long 10,000 shares all at one time, I'd see how many shares I could get by quickly entering several orders for 1000 shares.

Why would I deal with this 1000 share increment nonsense? Well, I'm trying to make use of auto-ex where orders that are sent to the floor of the NYSE (sent to the specialist) for 1099 shares or less are matched electronically (instead of being matched by the specialist).

How does this help me? Well, imagine there is 100 size on the offer at $X. Now let's say the Futures suddenly starts ripping up. Then suddenly, there is a big buy order of 250 size for the price of $X. Well, if I were to put in a buy order now, I'll not get filled (because I am now behind the 250 size order and there are not enough shares at $X).

However, the specialist is slow and there is often a slight delay whenever the specialist has to fill a big order. If I see the above situation occur, I can get shares by using auto-ex and have my orders matched electronically at the price of $X, as long as the number of shares I use is less than 1099. I can do this several times quickly and in essense, I'm taking the shares away from the order for 250 lots.

BUT, you've got to be fast because the specialist can turn off auto-ex (he will do this if prices are fluctuating too fast or there is a sudden movement in the overall markets), or the specialist might be quick to the draw and fill the big orders before you can even get an auto-ex order off.

Yes...I know...that explaination was confusing...I'm sorry. And yes, for those who are more well versed in the technicalities, I know there are some stocks that are part of the pilot project in which the restrictions for auto-ex have been lifted...but I don't have the time to find out which ones are part of the list...

Anyways, I ended up accumulating a huge number of trades (194 today!) and this is now the 4th day in a row in which I have beat my record for number of trades. Today my keyboard was was fire and I don't think I remember hitting so many keys on the keyboard so many times before...

But other than that, I thought that the overall markets were fairly boring today. I didn't really see many opportunities and most of the movements had no follow-through. As a result, I didn't really get a good grasp on profits today.

All day I'd lose some, then gain some. And there were lots of times in which the market lull had me reaching for my MP3 player and the daily crossword in the newspaper.

Right now I don't really know what I'm babbling about...I'm fairly tired...I had originally decided to take today off (since I came home late from our long-weekend road trip last night), but I woke up early and I just couldn't resist going in to trade.

Lemme get some good rest tonight so that my head can clear up.

Good Trades
10:09AM - Corning (GLW) was uptrending and so were the Futures. I went long 5000 shares when some resistance broke. Held this until I felt like it couldn't go up any further. I got out as follows: 1-cent winner (1000 shares), 5-cent winner (2000 shares), 6-cent winner (2000 shares) ($230 profit before fees ; In: 10:09:09AM ; Long 5000 shares @ $21.80 ; Out: 10:12:48AM)

Bad Trades
10:15AM - Walmart (WMT) was chopping all over the place while the Futures were flat. I went long 3000 shares when I saw some size appear on the bid. Well, again, I trusted what I saw on the Level II and as a result, I had to get out for a 6-cent loser ($180 loss before fees ; In: 10:15:14AM ; Long 3000 shares @ $45.84 ; Out: 10:16:58AM)
  • Yup - I did it again...I went in when I saw something on the Level II and didn't consider anything else...when the size on the bid disappeared, prices fell back down

6 Comments:

  • J.C: It is very interesting to read about the 1000 share increment things.Your blog is at the top of my reading list now.

    Keep it up.

    Gav.

    By Anonymous Gav, at September 05, 2006 8:46 PM  

  • Gav,

    Thanks for your comments.

    I'm glad someone sort of understood what I was writing about :)

    Again thanks for the compliments and I'll also be following your progress as well. Let's all hope for a great September!

    Happy trading!
    JC

    By Blogger J.C., at September 05, 2006 9:45 PM  

  • Love the way you have your stats set up. I'm definitely going to have to incorporate that. Thanks for the explanation on the auto-ex. September should definitely be better than August, so don't throw in the towel yet just because you don't reach that 10k goal. You've made lots of progress so far, you will only get better.

    By Anonymous butterboy, at September 05, 2006 9:53 PM  

  • Butterboy,

    Thanks for your comments.

    I'm glad there are people out there that appreciate the bit on auto-ex. I'll keep trying and I'm hoping that September brings better luck with it. It's funny - since becoming full-time back in November 2005, I've always had that goal of making $10,000 in a month and I had been holding on to this goal all this time...but this month is the first month in which I've reduced it to $8000; let's see if this subtle change has any psychological ramifications.

    Best of luck to you and your trading in September!

    JC

    By Blogger J.C., at September 05, 2006 10:19 PM  

  • Excellent blog.

    I didn't know there was a list of stocks where the restrictions for auto-ex had been lifted. For auto-ex, I believe there is a minimum 30 second waiting period between orders, so for your "trick" to work, your stock must be on that list, correct?

    Continued good trading.

    By Blogger Mr Subliminal, at September 06, 2006 1:39 AM  

  • Mr. Subliminal,

    Thanks for your comments.

    That is correct. The original auto-ex restrictions included a 30 second waiting period between orders, but with the Hybrid pilot project the NYSE is running, they have lifted this restriction on some stocks.

    I also believe that in the end when the NYSE implements the Hybrid market, the 1099 share restriction will be lifted to a maximum of 2 million shares (not sure if this is right). I think currently they are testing this with Lucent (LU) or Nortel (NT) (it's one of those very very thick stocks).

    Happy trading!
    JC

    By Blogger J.C., at September 06, 2006 7:26 AM  

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