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

Thursday, September 14, 2006

Nobody Likes Change...

Gross: +$298.68
Net: +$73.59
Loss From Top: $52.77
Trades: 178
Shares Traded: 182200

Stocks Traded Today (net profit/loss):
Corning (GLW): +$152.95
Home Depot (HD): +$119.73
Boston Scientific (BSX): +$38.59
Exxon Mobil (XOM): +$17.05
Walmart (WMT): -$43.98
Advanced Micro Devices (AMD): -$210.75

As I delve deeper into the new Hybrid market that is to be implemented at the NYSE, it would seem that I am coming across a lot of complaints and concerns from many traders.

And it's not inexperienced traders that are bringing up these concerns...it's the guys with lots of experience and who read through every document the NYSE has submitted to the SEC with regards to the new Hybrid system.

From what I can gather so far, yes there are going to be differences in execution and yes stocks may begin behaving a little differently, but I guess we're just gonna have to suck it up and adapt!

Judging from what's been going on lately, the NYSE appears to have their hands full as they try to handle complaints from their customers and have already been forced to make last minute changes in the way certain things will be handled in the new system.

But I can definitely see where a lot of these trader complaints are coming from. Imagine you've got a profitable system that you've worked out after years of development and have been using it for several years with great success. Now imagine that a Hybrid system is going to be implemented that could jeopardize all of that...I don't know about you, but I'd be pissed.

I cannot even imagine the furor there was back in 2000 when they got rid of fractions and priced all stocks in decimals. I was not active in the markets back then, but from the articles I've read, it almost spelled doom for a lot of daytrading firms. BUT, traders adapted and those who did not had to go and get a regular job.

I doubt the Hybrid system will have as big an impact as decimalization, so lets all hope the rollout goes smoothly and the transition won't hurt as much as many expect. I, of all people, hope I can adapt because I don't want a regular job!

This morning we had problems company-wide because the NYSE upgraded their data center overnight and apparently there were some incompatibilities. As a result, we could not see the NYB (New York Book) on the Level II for the first hour. The only quotes we did have were the Level I quotes and the ECNs.

I tried trading during this hour, but I soon realized it was a lot more difficult without knowing how many shares are on the book! Needless to say, I lost some money.

As the day progressed, I reduced my share size because the markets were excruciatingly boring! I swear, if the markets were like this everyday, every trader would die of extreme boredom and we'd be compared to accountants! (sorry if I offend any accountants out there...).

Almost every trade I put on were only partial setups because the Futures never really trended at all today. For a good 6 hours today, I was going from chart to chart trying to find a stock that was moving, but instead, I was left with choppy trading conditions all day.

Mid-way through the afternoon, there was a trader alert for all traders telling us that the NYSE was changing the fees for using ARCA (an ECN). The new fees start October 1st and is as follows:
  • 0.003 cents per share for removing liquidity
  • 0.002 cents per share credit for adding liquidity
  • 0.001 cents per share for orders that are routed away from Arca (i.e. if you use Arca route)
All I can say is WOW! It'll now cost me $3 on 1000 shares for removing liquidity! It's a good thing I rarely use ARCA...the only times I'll use Arca is if a level is taken out and there are Arca shares left OR I am trying to get short on stocks that adhere to the uptick rule (which in this case, I'll get a credit for adding liquidity).

These new fees are coinciding with the rollout of Phase III of the Hybrid markets....

Hrmm.......change is coming.....I can feel it......and I'm already starting to feel queasy....


Good Trades
None...it was too jiggly today to pull off any real good trades...

Bad Trades
None...I was just jiggled out many times today...

2 Comments:

  • hey JC, have you ever thought about using trade-ideas? There weren't many stocks trending today, but there were a few and I noticed them from trade-ideas (e.g. NYX). Just a suggestion. But then again, I think I remember you saying you only look at some specific stocks.
    Also, we both trade with prop firms, but the setup is different. You don't put up any of your own money, and I do. I recall you saying that you were not making enough to live on. Perhaps you can find a prop firm that will give you a better deal if you put up some of your own money. It's obvious you can trade, so I'd hate to see you go back to a real job (the horror!). Good luck, man.

    By Anonymous Ugly, at September 15, 2006 7:16 PM  

  • Ugly,

    Thanks for your comments.

    Actually, just recently I was thinking of using some kind of service that could help me identify trending stocks, so it's probably something I will consider. The only problem is that the computers we use at my firm have certain things disabled (Java, Flash, etc), so I'll have to look into a service that does not require this.

    As for finding a new prop firm, this is also something I am considering. I've been talking to other traders and they have floated a couple of names of other prop firms, so some time in the near future, I may want to investigate them. But for now, I'll continue at where I work while I continue to "learn the ropes". When I'm ready to make the big leap, then I'll consider other firms.

    Best of luck to you Ugly,
    JC

    By Blogger J.C., at September 16, 2006 6:47 PM  

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