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criteria you wish, such as market-maker price changes, volume, spreads, number of market makers, and frequency of changes. This tracking system should be able to monitor the market the way you would want to if you had unlimited mental capacity. |
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It is physically impossible for a human being in one glance to observe all the movement and search through all the data on the over 5000 stocks trading on Nasdaq and to assimilate all the changes happening in the market. While your DAET system should include a computer program that will allow human beings to observe changes in the market and to react quickly to those changes based upon preprogrammed criteria, I am not an advocate of programmed trading. The Crash of 1987 was caused by programmed trading triggering other sell programs until the slide was so precipitous that no broker dared to answer the telephone. |
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Price information comes from two sources. One source is external to the market, and the other source arises from the inner workings of the price mechanism within the market. External information by definition is exogenous to the market and can be obtained by anyone. With due diligence and research time, we can all discover SEC filings, the worldwide need for any company's products, world news, and industry news. Usually, much outside information is available on the Internet. Every industry has its own professional publications spreading the gossip about personnel changes within the industry and management styles of leading chief executives. There is even a weekly dry cleaning magazine! In theory, all people have access to the research reports, evaluations, theories, and opinions of experts. |
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Internal price information was historically the exclusive province of market insiders. Until recently, even major exchanges would delay price quotes to the general public. Current stock prices were treated like CIA classified documents and not to be revealed to the general public for at least 15 minutes. Customers especially were deemed to have no need to know. |
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Internal price discovery was a two-tier system in which the inside professionals had more current price information |
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