I just noticed that for the second time in about a week Ugly posted about not getting filled on an order to short an NYSE stock. Last week he missed an entry on AMR and today he missed TIE. Today he pointed out that:
I was way ahead of this one and I tried to short it below the bid. But a few seconds pass and a few orders and suddenly the bid becomes the ask and the bid drops without my order being filled. I hate shorting NYSE - Nasdaq orders happen instantly. I guess it just takes more finesse.
I also hate shorting NYSE stocks. They can be very tough to catch. In fact, I couldn't get filled on ELN today as it hovered above 17. I know I would have gotten filled on the Nasdaq. But I actually managed catch TIE today at just about the same time Ugly tried to short it. The thing about shorts, even on the Nasdaq, is that with few exceptions, you need the stock to uptick to get filled. Because of the speed of Nasdaq is usually much easier to get filled once something upticks. On the NYSE, you're at the mercy of the specialists.
There are a few things that I do to compensate for the NYSE's slow a$$ fills. I think all of you know that I almost never use limit orders because I'm more interested in getting filled than saving a penny or two. Market orders (are supposed to) get priority over limit orders and therefore are usually quicker to get filled. However, shorting NYSE stocks is the one time that I'm much more likely to use a limit order. But if the stock isn't in free-fall and the spread is tight I'll try a market order first. If it takes more than 10 seconds to fill and/or the stocks starts running away from me (dropping) I'll cancel the order and watch for another chance (a bounce) to enter. I'll often just enter a limit order at or just below my original target entry price. Or, if the stock hasn't dropped too much I'll follow it down with a limit order until it gets filled or it's dropped too far.
On the more volatile stocks, like TIE, I'll try to enter a little early, before it breaks support. That's what I did today with TIE. I saw it teetering about 5 cents above the low of the 11:00 candle. (see the chart below) I figured it would hit an air pocket if it broke that support. (You don't get upticks in an air pocket.) The stock had basically been going sideways for several minutes so I just went ahead shorted it above support. That gamble paid off because it did indeed hit a little air pocket a few minutes later.
Because of the uptick rule it's tough to short a stock right when it breaks support, unless it's very liquid. The NYSE makes it even tougher. There are things you can do to increase your chances of getting filled but sometimes you're just S.O.L. :-) I think that was the case with Ugly today. It made sense to try to short it under the bid. I'd say it was just bad luck that he didn't get filled. This is why so many day traders focus on Nasdaq stocks.
Here's today's intraday TIE chart:
P.S. After I posted this I noticed this old post of mine in the 'related posts' section below. This was a juicy NYSE short that I couldn't get filled on back in 2004.
I feel your pain. I have had more issues recently with NYSE stocks - both entering and exiting, long and short, limit and market. I have really started to scale back on NYSE stocks because of it...
I always use a market order on NASDAQ - unless it is a really thin stock (I don't normally trade those, anyway). I get great fills 99% of the time.
X,
I try to avoid the NYSE stocks too but so many of these commodity plays are there so it's tough to avoid these days.
It's good to see another trader who almost exclusively uses market orders. We're a rare breed.
Hey Mike,
Glad you got your fill, even if I didn't get mine. Then again, maybe you're part of the reason I didn't get mine. That's okay, all part of the great game.
So your TIE short was filled on a market order? Hmmmmm.
Thanks for expanding on my post - gives me something to think about.
Actually, I did the same thing you did. I put in a limit that was a couple of cents below the bid at the time. On a less volatile stock I would have used a market order but I didn't want to risk it hitting that air pocket while my order was being filled. 90% of the shares got filled at the bid and the rest actually filled a cent above the bid.
Just a reminder: buying put options would be a nice alternative in this situation. It may not be as pure of a play, but at least you dont need hope for an uptick. :)
Thanks Mike--you have a real nice blog here.
If you want a sure execution, use a limit order above the ask for a long position. Ditto what Michael said for a short, limit order below the bid.
I don't do it often but if the market's fast and I want to get in.
hey mike- great blog. Another way to increase ur chances of getting a short filled at NYSE is to use the ECNs, for those with direct access brokers. If u don't have a direct access broker, I highly recommend getting one. More and more market participants are trading this way as frustration with front-running, non-filling specialists is at an all-time high. Besides, with the new hybrid market coming, this will be the future of NYSE trading. Use a limit order a few cents below the bid and you'll increase ur chances of getting filled. Also, to get better pricing on NYSE pilot stocks (those not requiring an uptick) use a combination of market and limit orders to get your fills. Happy Trading!