direct access trading – limit your risks
around 1600 trading paper
big brokers made us lose sight
created a veil of mystic
they were not true
they were simply middle men
they cost you more
you start losing both money and control
we can do it alone and we can do it better
we don’t need to share our profits
just give us the info and a computer
we have the same information as our broker but not the same info as our broker’s trade desk
nasdak level II
you can now understand the transparency of the market with level II
we get to see who wants and who doesn’t want, who has a need and who has a supply.
On level one, you are stacked with the inside bid.
Biggest break through in online trading came with ECN = Electronic communication networks.
—> Trade clearing
—> Transparency into the market
—> Allows you to advertise
—> Allows you to negociate
everybody knows what everybody else is doing
ECN = satellite nasdaq
ECN’s are seen by lots of people
A lot of brokers and people have access to level II – They can give you access to the info but don’t let you use it!
Direct access brokerage
these are the new wave guys
help you get on the highway of data
you are still no getting awat from the comissions
with level II, you have your hands on the steering wheel. You are in control all the time, you simply pay an toll access.
If you have to pay a commission, you might as well have the control
Right now, we have 9 ECN’s
Nasdaq is the only one that has level II
Ebay is an ECN for your garage junk
Day traders – electronic traders
A trap is not a trap if you see it
if you see it, it can be an opportunity
The ECN’s are were the traders are
The other players: the market makers
A market maker is somebody who makes a market
Around 500 market makers available.
if a market maker is not on both sides of the trade at all times, for a period more than 5 min, they are thrown out of that stock for 20 days
Cisco trades at around 35’000-40’000 shares/min !!!
390 min in a trading day x 20 trading days
if you’re going to be a trader, you need to know the top players in each sector of the market
Those players are different for different stocks and different sectors
where can you find who is the top player for any stock? nasdaqtrader.com
check for market participants
you can check by stock or by participant
as new traders, you want to stay away from volatile stocks
you better know the players in your stock
you better know too theire overall position in that stock
are they net buyers? are they net sellers?
Who bought the market when the market hit bottom in 1987? The market makers!
Level II is a great tool but it is only one of many
You need to learn to see with new eyes