‘Dark Pool’ Trading Causes Headaches on Wall Street
Most of us don't have access to these 'dark pools'. Although it is perhaps a bit off-topic, I am wondering if anyone has any general trading strategies to avoid moving stock prices around that they are willing to share with the board.
In the past few years, the size of trading blocks has gotten a lot smaller. If you look on level 2 for a thinly traded stock (say 100-300K shares/day -- typical for a $100-500M market cap company), almost all bids and asks are 100-200 shares ... which is ridiculously small!
I'm told that funds have computer systems which automatically break up their trades into such bite-sized chunks ... but what should the rest of us do?
If you want to trade ~10-100+K shares of a thinly-traded stock, it is a frustrating exercise which wastes a lot of time or a lot of money - or both. Either you spend all day breaking your trade up into lots of tiny little pieces and pay a ton in commissions ... or you just let fly with ~5K orders and watch in pain as the bid and ask RUSH away from you ... and idiots toss their 100 and 200 shares orders just ahead of you -- confident that you will 'protect' them should the market direction change.
Of course the more money you have and the more money you want to trade, the worse the problem. So as a result of the decrease in the average order size and the fact that I am trading much larger amounts than a few years ago ... this issue has become much more serious for me.
Does anyone have a strategy to deal with this problem??
I imagine someone will suggest simply staying away from $100-500M market cap companies. And maybe that is the only answer.
micro
Life is an IQ test.
email: microcapfun@yahoo.com
