Trader talks about vwap
from someone with no opinion of the company or stock.
Just in case anyone on Yahoo keeps talking about eVWAP doing four or however many million shares in a record day, you can tell them that your trader friend said that while total volume is somewhat important from a revenue standpoint, far more important is the size of the individual trades making up that four or whatever million shares.
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Several million shares with an average execution size of less than 5,000 shares or less is essentially worthless, especially if the goal is to attract large institutions.
ECNs average anywhere from 300-500 shares per trade, which is a reason why institutions generally don't use them for anything other than clean-ups. ITG's POSIT averages 8,000 shs and crossed a one million share block of Disney (DIS) last year; LiquidNet averages somewhere in the neighborhood of 50K - 70K share blocks in its' peer-to-peer trading network. That's the kind of liquidity buyside institutions are looking for.
As for trading at the close, there aren't many worse ideas that could be embarked upon, even though professional traders have known the joke of this practice for years. Look up this recent article to see how lousy and misguided this practice is: "The Hidden Costs of Trading At The Close," by David Cushing and Ananth Madhavan (Spring 2001, Journal of Portfolio Management Special Edition: Transaction Costs).
For anyone who says that certain ideas take a long time to implement...not so. LiquidNet got rolling with great volumes of liquidity and huge institutions on board the first day it became operational and POSIT has grown year-over-year for over a decade. The fact is, financial institutions are aware of what is going on; if it complements their business model, they are quick to adopt it. If it doesn't, they couldn't care less. And that is what finds electronic trading systems either having, or wanting, for business. Recent examples of the latter category are AZX, Optimark, and Wofex.
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I do wish to provide you with the truth about trading, institutions, and electronic systems as I know it. Too many folks would take my opinions to be a statement about the company - Ashton - which I have no public opinion or comment on, positive or negative.
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Just say NO to stock fraud!
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Just say NO to stock fraud!
AI
