Request Information
From Advertisers
Traders.com
Stocks &
Commodities

  • Subscribers' Area
  • Current Issue

  •    - Opening Position
       - Letters to S&C
       - Traders' Tips
       - Futures Liquidity
       - News & Products
       - Books
       - Cover Art

  • Free Articles
  • Article Abstracts
    1996-Present
  • Complete Articles
    1982-Present
  • Novice Traders' Notebook
  • Glossary
  • Subscribe
  • Renew
  • Free Trial
  • Search
  • Working
    Money
    Traders.com
    Advantage
    Traders'
    Resource
    Online Store
    Message Boards
    Article Code
    Free Newsletter
    Products
    Search
    Help
    Subscribe
    Renew
    Contact Us
    Home

    Enter search terms:


    Products
    Small Book Image for Store.Traders.comStore.Traders.com
    Purchase past articles on hundreds of topics, along with software, books, and magazine subscriptions over a secure web connection. Click Here

     
    Search Products:

    @ Online Store!
    S&C Magazine Subscriber Login
    S&C Free Trial Issue
    S&C Volume Books
    S&C Magazine
    S&C on DVD
    Software
    Articles
    FREE ARTICLES! (while they last)
    The 21st-Century Technician
    Trading By Tape-Reading
    Suri Duddella Notes
    Elwave 9.0
    Bennett McDowell
    VisualTrader 4.0
    Forex Volatility Patterns
    Stock Trading Success
    Market Dynamics
    Bill And Justine Williams
    StrategyDesk
    Profiting From The Gartley
    Elwave 8
    Steve Nison's Profiting In ...
    Best Choice Software
    High Growth Stock Investor
    Daytrading With TheStockBandit ...
    Support & Resistance ...
    eSignal 10 and Advanced GET ...
    Buying Straddles
    NeuroShell Trader 5
    GTS Pro
    Between Price And Volume
    Point & Figure for Forex
    Direct Pro
    A Window to Our Workshop
    Profitunity Home Study Course
    Adrienne Toghraie
    MultiCharts 2 (Part 2)
    MESA8
    MultiCharts 2 (Part 1)
    C. Kirk of TheKirkReport.com
    StrataSearch 3.0
    IBFX-GPS
    Traders' Resource
    Advisory Services
    Books
    Brokerage
    Consultants
    Courses & Seminars
    Data Services
    Exchanges
    Hardware
    Mutual Funds
    Online Trading Services
    Publications & Newsletters
    Software
    Trading Systems

    Information Directory
    S&C Tour
    S&C Magazine
    Resources
    Products
    Subscribe
    This Month's Issue
    Home | S&C Magazine | Working Money | Traders' Resource | Message-Boards | Store

    Q&A


    Since You Asked
    Confused about some aspect of trading? Professional trader Don Bright of Bright Trading (www.stocktrading.com), an equity trading corporation, answers a few of your questions.

    Don Bright of Bright Trading



    PARAMETER EQUATION?

    Say a stock is priced at 30 and trades one million shares per day. If you place a buy market order for 1,000 shares, to what price do you drive up the stock? This assumes that had you not entered the order, the close would have been 30. Basically, I'm looking for an equation having parameters: price, average daily volume, and order price (and I know this is difficult) for how much you affect the price of the stock. Thanks.--Sky123987

    There is absolutely no way in the world to know anything like this, regardless of what others may say. This is a marketplace, and much like any other free market, you have buyers and sellers with different agendas, different hedges, and perhaps 100,000 shares or more of "iceberg" orders that don't show up in NYOB or Level 2. ("Iceberg" orders are where the actual share size is not displayed.)

    Our traders are taught to watch the actual trades, not just the number of shares being bid for or offered. That way, they can tell if there are hidden orders, or trades from the "dark pools." Here's where to check: www.redi.com/forms/algo720.pdf.

    You may actually get price improvement from National Best Bid or Offer (NBBO) based on proper routing (SigmaX, in our case).



    VARIATION ON A THEME

    I submitted a limit order to narrow the bid-ask spread and I actually got a price improvement! Why does this happen? -- bidask

    Several reasons could apply. First, there may have been a better price on another market center (ECN and so forth) between the NBBO, which requires the orignal market destination to forward to the better price destination. This is due to the National Market System (NMS) rules.

    In addition, there are "hidden pools of liquidity" out there that are often priced between displayed bids and offers. Major firms have millions of shares offered and bid for in these pools. You can learn a bit more about that at www.redi.com/forms/algo720.pdf.

    Another way for this to happen is you may send in an order at a certain price, but immediately after that, a better order comes in where they fill your order.

    Sometimes there are iceberg orders. And sometimes there are orders that are not displayed.

    Hope this helps.



    IS THERE AN X FACTOR?

    Can anyone be trained to trade for a living? Is there some type of X factor involved? -- Anonymous

    My answer is a resounding "yes and no." I have worked with hundreds of professional, full-time, and part-time traders over the last three decades or so, on various trading floors and within various trading venues. A great deal can be "taught," such as working strategies. But a great deal cannot. The results have ranged from astronomical successes to dismal failures (and that really concerns me). It's the same thing on the trading floors.

    Somehow, there is something that some traders have and others don't. That doesn't mean you can't be trained to make money trading; many can, but the level of success varies greatly. The "love of the game" has a lot to do with it. Understanding that there are no absolute systems in the markets has a lot to do with it (so many traders spend so much time trying to fine-tune something that may be flawed from the get-go).

    Understanding the risks and the rewards has a lot to do with it. For example, studying how to play blackjack correctly can certainly help you become profitable, but the level of success varies from player to player. A computer cannot beat the casinos (many have tried over the years). After all, you must have casino knowledge to get away with counting cards. I was barred as recently as last weekend. I think I got greedy (and that has something to do with this discussion as well).


    E-mail your questions for Bright to Editor@Traders.com, with the subject line direct to "Don Bright Question."

    Originally published in the September 2008 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2008, Technical Analysis, Inc.



    Return to September 2008 Contents

    Technical Analysis, Inc.

    [Home | Working Money Magazine | S&C Magazine | Traders.com Advantage | Online Store]
    [Traders' Resource | Add a Product to Traders' Resource | Message Boards]
    [Subscribe/Renew | Free Trial Issue | Article Code | Search | Help Files]
    Departments: [Advertising | Editorial | Circulation | Employment | Contact Us]

    Copyright © 1996-2008 Technical Analysis, Inc. All rights reserved. Read our privacy statement.

    Technical Analysis, Inc.
    Subscribe! Free E-mail Newsletter.
    First: Last:
    E-mail: