The SEC has weighed in questioning the legality of these orders (http://www.tradersmagazine.com/news/-103830-1.html), yet Nasdaq and our self regulating market centers continue to implement them. What are these order types? Imagine you are a mutual fund who wants to enter an order to buy 500,000 shares of JNPR at 24.30 (only showing 500 shares of it to the world, mind you). 10,000 shares are OFFERED there in ARCA, and your intention is to take whatever is offered (you assume at least the 10,000 shares) and bid for your 490,000 share balance, again showing 500 shares only. Now imagine you enter the (more…)

There is a running discussion on whether or not it matters that 70% of the volume we are seeing every day is from automated, proprietary trading and algo’s.  Anecdotally, buyside customers are very quiet. Anecdotally, retail is quiet. The folks I talk to are not at cocktail parties on weekends talking about their latest stock tips. So this HFT gives the illusion of liquid markets. A buyside trader may want to concluse that if he/she had a million share order, it would get done tight, and with a highly predictable, and perhaps minimal impact, based on the volumepattern they now see. (more…)