Program Trading Frequently Asked Questions

Program Trading Frequently Asked Questions

Here are the top ten most Frequently Asked Questions of 2024

If you have other questions simply contact us and ask. There is no such thing as a stupid question when it comes to Program Trading. And we are the only firm in the world that will answer your questions for you. We also have additional pages on our web sites that will answer a lot of your questions for you to study well. If you study Program Trading well, you will be well rewarded.

What is Program Trading?
The media talks about program buying or program selling constantly. CNBC lists Fair Value and program trading buy/sell levels every day. Exactly what is program trading?

That's a good question and there are really different answers and definitions depending on who you ask. Probably the best known definition is from the New York Stock Exchange. The NYSE says that any time a member firm executes a trade in 15 or more stocks simultaneously that are worth more than a million dollars, this "simultaneous trade" is to be defined as a program trade. Also that NYSE member firm that did that simultaneous trade must report that trade to the exchange. That is how the NYSE knows that program trading is over half of the volume almost every day, and on some days runs a lot lot more.

For our clients a program trade is one that encompasses the PREM with an exact predetermined execution level, either as a buy program or a sell program. And whether that trade is only one or two stocks, or 15 or 30 or more stocks, during the time that our PREM execution level is hit, is not as important to us as the actual PREM execution level being hit in the first place. That pattern of PREM execution levels hitting on certain days and at certain times is the key to Program Trading and High Frequency Trading. And not just for plain vanilla index arbitrage, either. The PREM is the key for all program trading and you have to know it and know it well.

Others define program trading as the purchase or sale of a large number of stocks contained in or comprising a portfolio. Sometimes you will hear clerks on the NYSE say that a sell program or a buy program is being done on the floor. But this type of portfolio change, typically done by mutual funds, is not important for our clients. If the PREM is not moving, then we do not consider it a true program trade.

What is High Frequency Trading?
The media also complains about High Frequency Trading (HFT) constantly. Instead of complaining about it, I want to know how I can use it and benefit from it.

HFT was the big buzz word and Wall Street fad of 2010, complete with a Federal Government investigation of course, wasting the tax payers money as usual.

But really HFT is nothing more than a sneaky market making function usually. By executing a whole bunch of little orders over and over, market makers on Level III can add liquidity to certain stocks at certain times. But in index futures, it is a completely different deal. And pure market manipulation at certain times. And if you know those times in advance, obviously it will help you with your trading. HFT is normally net neutral over time. Almost all buying early in the day, will be offset by selling later in the day, or vice versa. And here again, only at certain times.

Another form of HFT is more like arbitrage, but in one stock over different markets or exchanges, using small orders over and over to take advantage of a price difference in a stock between one exchange and a different exchange for example.

In general there are two types of firms using High Frequency Trading.

Program trading firms that normally make money from trading and therefore do not want others to see what they are doing is one type. By making a whole bunch of little orders instead of one or two huge ones, they hope to hide what they are doing and hopefully make more profit. The best HFT firm on Wall Street is this type of firm. And they will blow you up and especially in index ETF's and Futures.

Trading firms that normally do not do well with their trading and make their money on commissions instead is another type. They do HFT in order to hide just how stupid they really are with their trading. You probably already know this type of firm very well, since they are mentioned in the news a lot lately. Especially when trading with no stops.

If you would like to know which firms are in which type, then contact us and we will provide a private link for you. Yes you can do very well just following the firms that are known to make money. And you can follow that every day on Program Trading Live.

What is Fair Value and what are Premium Execution Levels?
The media also talks about Fair Value constantly and the "premium" or "spread" and certain execution levels. What are they talking about?

The "premium" (PREM) or "spread" is the difference between the most active S&P 500 Stock Index Contract (the spoos) minus the actual S&P 500 Stock Index (cash). That difference, which usually ranges between $10.00 to $-10.00 (depending on interest rates) and slowly decays or rises as we reach the S&P 500 Contract expiration. And is on which all program trading and the best high frequency trading is based.

When the PREM difference rises to a certain execution level, "buy" programs kick in. Our large institutional clients then buy the stocks in the S&P 500 Stock Index on the New York Stock Exchange and sell the S&P 500 Stock Index Contract against those positions.

When the PREM difference drops to a certain execution level, "sell" programs kick in and our clients do the exact opposite. These transactions have extremely low risks because of the abnormal market differences in the PREM as traders capture those few basis points of profit before the PREM returns to normal and/or Fair Value.

This type of program trading is called index arbitrage and is common. But it only accounts for less than 2.00% of all program trading activity done each day.

Please be very aware, that "sell" programs are used to buy stocks too. And always on days that the INDU usually closes positive. And that "buy" programs are be use to sell short stocks too. And always on days that the INDU usually closes negative.

So much so, that just knowing the PREM and the buy and sell levels is never enough if you are going to level the playing field with the best trading firms in the world.

If you would like more information about the types of program trading that accounts for over 98.00% of the volume and the Program Trading Research required to trade it, then simply contact us. We will reply promptly.

What is Program Trading Live?
The media also talks about Market Makers and professional traders talking to each other on some private instant messaging system. What is is that about?

Yes program traders do talk with each other all day, both internally at their own firms, but also with other traders at other firms too. If you would like to learn a lot more about that then click here.

What is a Dark Pool?
The media also talks about Dark Pools constantly and how unfair they are? What is that about?

A pretty cool Wall Street buzz word and sounds mysterious. But a dark pool is nothing more than a securities broker/dealer crossing trades between two customers of the brokerage house and not sending those orders to the NYSE or other stock exchanges. Crossing customer orders "in house" was a very common practice for years in the NASDAQ stocks, that the broker/dealer was a market maker for on Level III. But now when that same broker/dealer does it on a computer, every one gets all nervous and says oooooh AAPL is trading in a dark pool and that program trading AAPL or any other stock is bad! Ridiculous!

First of all, dark pools are not really program trading per se. Yes they are done with computers and with computer programs. But so what? Dark pools are secret by nature and no other traders can see what is happening with them in real time. Therefore they are worthless to those of us who are not market makers. Since they have no predictive value for us, why bother? Or worry about them.

Now if you actually know the code for the computer program running the dark pool, then fine. You now have a grey pool and maybe you can predict the future with it. And if you can steal the code from a firm like GSCO, then you can really predict the future with it. And that is why GSCO was so upset about it.

"What does GSCO know, and when did they know it." Program Trading 101

What about your Program Trading Research?
What does PREM have to do with your research?

Our Program Trading Research is designed to tell you in advance what time the PREM will reach the high and low points of the day, so you can front run the PREM instead of just sitting and waiting and watching your screen.

By knowing in advance when the PREM will hit, you can fine tune your trading to take advantage of these abnormal market situations just like the very good program trading firms do. And with program trading volume running at 60 to 90 percent, it is mandatory for you to have the PREM on your screens and know exactly how to use it.

Most platforms do not have PREM. Most data vendors screw it up. And most stock brokers do not even know what it is. So if you have PREM you have a huge advantage over other traders who do not have a clue. If you need help with that contact us and we will help you with it.

What about the New York Stock Exchange?
What the NYSE PR Department does not want you to know!

The New York Stock Exchange quietly moved the Program Trading goal posts a few years ago. Not one trader in 10,000 even noticed it. Neither did CNBC, Bloomberg, or the Wall Street Journal. Did you notice it? Or do you not have a clue about the great volume cover up?

Program Trading is a very secret business. And the exchanges want to keep it that way. And especially when program trading becomes 90% of the volume on the NYSE. That volume is very bad for the PR Department obviously.

So by bending the rules in accounting and moving the goal posts on the floor, a field goal is only 1.50 points now. And a touchdown is only 3 points. The extra point after a touchdown has been eliminated. In baseball a home run now, is only a double. But still called it a home run, not a double. Pretty cool huh?

Each week the NYSE sends out their press release to the media, and each week the media prints all of the information about program trading. The information is true. But based on what? The very best Program Trading Desk know exactly. Therefore, you have to know it too.

If you are unaware of this very secret move by the NYSE and do not have a clue what we are talking about, then you should definitely contact us for more information. We will send you additional private links about program trading and the NYSE.

What is the best Trading Platform?
What about Ninja Trader?

NinjaTrader (NT) is only average trading software and depending on your data feed with it, can be one of the very worst trading platforms that you can use. Most likely you are using horrible data and have a horrible platform and have a huge problem. And do not even know it. Which is not good.

Since most trading firms like MLCO, BOFA, DBAB, SBSH, and JPMS (and almost all hedge funds) use Bloomberg and Reuters data feeds (which are very similar to almost all data with NT), those firms do not have as good of information as you can have on your very own computer. And by using your computer well, you can blow them up, almost every day. A relatively simple process, once you learn what time to do it.

But to do that effectively, you must program into your computer the correct program trading symbols. Symbols that MLCO, BOFA, DBAB, SBSH and JPMS do not even have running correctly on their Bloomberg and Reuters terminals! And therefore, your advantage over them.

If you would like to know more about that, and how to set up those symbols, then contact us. Tell us that you are using NinjaTrader and tell us exactly what you would like to know, and we will respond to your request promptly.

What is the best Trading Platform?
What about thinkorswim?

thinkorswim (TOS) is a member of FINRA and clears your trades with TD Ameritrade. TOS is one of the very worst trading platforms that you can use. You are using a horrible platform and you do have a huge problem. Which is not good.

Since most trading firms like MLCO, BOFA, DBAB, SBSH, and JPMS (and almost all hedge funds) use Bloomberg and Reuters data feeds (which are very similar to the TOS data feed), those firms do not have as good of information as you can have on your very own computer. And by using your computer well, you can blow them up, almost every day. A relatively simple process, once you learn it.

But to do that effectively, you must program into your computer the correct program trading symbols. Symbols that MLCO, BOFA, DBAB, SBSH, and JPMS do not even have running correctly on their Bloomberg and Reuters terminals! And therefore, your advantage over them.

If you would like to know more about that, and how to set up those symbols, then contact us. Tell us that you are using thinkorswim and tell us exactly what you would like to know, and we will respond to your request promptly.

What is the best Trading Platform?
What about Interactive Brokers?

Interactive Brokers (IB) may be a decent securities options clearing firm, but IB is one of the very worst trading platforms that you can use. You are using a horrible platform and you do have a huge problem. Which is not good.

Since most trading firms like MLCO, BOFA, DBAB, SBSH, and JPMS (and almost all hedge funds) use Bloomberg and Reuters data feeds (which are very similar to the IB data feed), those firms do not have as good of information as you can have on your very own computer. And by using your computer well, you can blow them up, almost every day. A relatively simple process, once you learn it.

But to do that effectively, you must program into your computer the correct program trading symbols. Symbols that MLCO, BOFA, DBAB, SBSH, and JPMS do not even have running correctly on their Bloomberg and Reuters terminals! And therefore, your advantage over them.

If you would like to know more about that, and how to set up those symbols, then contact us. Tell us that you are using Interactive Brokers and tell us exactly what you would like to know, and we will respond to your request promptly.

What if my question is not answered above?

Questions like:

What about TradeStation?

Are your Program Trading Seminars for beginners or rookies?

If PREM gives traders an edge. How is it used?

What is the TIKI?

What about trading the E-mini Futures?

What is Index Arbitrage?

What about SPY Puts and Calls?

If you have other questions like these above simply contact us and ask. There is no such thing as a stupid question when it comes to Program Trading. And we are the only firm in the world that will answer your questions for you. We also have additional pages on our web sites that will answer a lot of your questions for you to study well. If you study Program Trading well, you will be well rewarded.

If you would like answers to your questions about program trading then please click here.	Program Trading Frequently Asked Questions Program Trading Frequently Asked Questions Here are the top ten most Frequently Asked Questions of 2024 If you have other questions simply contact us and ask. There is no such thing as a stupid question when it comes to Program Trading. And we are the only firm in the world that will answer your questions for you. We also have additional pages on our web sites that will answer a lot of your questions for you to study well. If you study Program Trading well, you will be well rewarded. What is Program Trading? The media talks about program buying or program selling constantly. CNBC lists Fair Value and program trading buy/sell levels every day. Exactly what is program trading? That's a good question and there are really different answers and definitions depending on who you ask. Probably the best known definition is from the New York Stock Exchange. The NYSE says that any time a member firm executes a trade in 15 or more stocks simultaneously that are worth more than a million dollars, this "simultaneous trade" is to be defined as a program trade. Also that NYSE member firm that did that simultaneous trade must report that trade to the exchange. That is how the NYSE knows that program trading is over half of the volume almost every day, and on some days runs a lot lot more. For our clients a program trade is one that encompasses the PREM with an exact predetermined execution level, either as a buy program or a sell program. And whether that trade is only one or two stocks, or 15 or 30 or more stocks, during the time that our PREM execution level is hit, is not as important to us as the actual PREM execution level being hit in the first place. That pattern of PREM execution levels hitting on certain days and at certain times is the key to Program Trading and High Frequency Trading. And not just for plain vanilla index arbitrage, either. The PREM is the key for all program trading and you have to know it and know it well. Others define program trading as the purchase or sale of a large number of stocks contained in or comprising a portfolio. Sometimes you will hear clerks on the NYSE say that a sell program or a buy program is being done on the floor. But this type of portfolio change, typically done by mutual funds, is not important for our clients. If the PREM is not moving, then we do not consider it a true program trade. What is High Frequency Trading? The media also complains about High Frequency Trading (HFT) constantly. Instead of complaining about it, I want to know how I can use it and benefit from it. HFT was the big buzz word and Wall Street fad of 2010, complete with a Federal Government investigation of course, wasting the tax payers money as usual. But really HFT is nothing more than a sneaky market making function usually. By executing a whole bunch of little orders over and over, market makers on Level III can add liquidity to certain stocks at certain times. But in index futures, it is a completely different deal. And pure market manipulation at certain times. And if you know those times in advance, obviously it will help you with your trading. HFT is normally net neutral over time. Almost all buying early in the day, will be offset by selling later in the day, or vice versa. And here again, only at certain times. Another form of HFT is more like arbitrage, but in one stock over different markets or exchanges, using small orders over and over to take advantage of a price difference in a stock between one exchange and a different exchange for example. In general there are two types of firms using High Frequency Trading. Program trading firms that normally make money from trading and therefore do not want others to see what they are doing is one type. By making a whole bunch of little orders instead of one or two huge ones, they hope to hide what they are doing and hopefully make more profit. The best HFT firm on Wall Street is this type of firm. And they will blow you up and especially in index ETF's and Futures. Trading firms that normally do not do well with their trading and make their money on commissions instead is another type. They do HFT in order to hide just how stupid they really are with their trading. You probably already know this type of firm very well, since they are mentioned in the news a lot lately. Especially when trading with no stops. If you would like to know which firms are in which type, then contact us and we will provide a private link for you. Yes you can do very well just following the firms that are known to make money. And you can follow that every day on Program Trading Live. What is Fair Value and what are Premium Execution Levels? The media also talks about Fair Value constantly and the "premium" or "spread" and certain execution levels. What are they talking about? The "premium" (PREM) or "spread" is the difference between the most active S&P 500 Stock Index Contract (the spoos) minus the actual S&P 500 Stock Index (cash). That difference, which usually ranges between $10.00 to $-10.00 (depending on interest rates) and slowly decays or rises as we reach the S&P 500 Contract expiration. And is on which all program trading and the best high frequency trading is based. When the PREM difference rises to a certain execution level, "buy" programs kick in. Our large institutional clients then buy the stocks in the S&P 500 Stock Index on the New York Stock Exchange and sell the S&P 500 Stock Index Contract against those positions. When the PREM difference drops to a certain execution level, "sell" programs kick in and our clients do the exact opposite. These transactions have extremely low risks because of the abnormal market differences in the PREM as traders capture those few basis points of profit before the PREM returns to normal and/or Fair Value. This type of program trading is called index arbitrage and is common. But it only accounts for less than 2.00% of all program trading activity done each day. Please be very aware, that "sell" programs are used to buy stocks too. And always on days that the INDU usually closes positive. And that "buy" programs are be use to sell short stocks too. And always on days that the INDU usually closes negative. So much so, that just knowing the PREM and the buy and sell levels is never enough if you are going to level the playing field with the best trading firms in the world. If you would like more information about the types of program trading that accounts for over 98.00% of the volume and the Program Trading Research required to trade it, then simply contact us. We will reply promptly. What is Program Trading Live? The media also talks about Market Makers and professional traders talking to each other on some private instant messaging system. What is is that about? Yes program traders do talk with each other all day, both internally at their own firms, but also with other traders at other firms too. If you would like to learn a lot more about that then click here. What is a Dark Pool? The media also talks about Dark Pools constantly and how unfair they are? What is that about? A pretty cool Wall Street buzz word and sounds mysterious. But a dark pool is nothing more than a securities broker/dealer crossing trades between two customers of the brokerage house and not sending those orders to the NYSE or other stock exchanges. Crossing customer orders "in house" was a very common practice for years in the NASDAQ stocks, that the broker/dealer was a market maker for on Level III. But now when that same broker/dealer does it on a computer, every one gets all nervous and says oooooh AAPL is trading in a dark pool and that program trading AAPL or any other stock is bad! Ridiculous! First of all, dark pools are not really program trading per se. Yes they are done with computers and with computer programs. But so what? Dark pools are secret by nature and no other traders can see what is happening with them in real time. Therefore they are worthless to those of us who are not market makers. Since they have no predictive value for us, why bother? Or worry about them. Now if you actually know the code for the computer program running the dark pool, then fine. You now have a grey pool and maybe you can predict the future with it. And if you can steal the code from a firm like GSCO, then you can really predict the future with it. And that is why GSCO was so upset about it. "What does GSCO know, and when did they know it." Program Trading 101 What about your Program Trading Research? What does PREM have to do with your research? Our Program Trading Research is designed to tell you in advance what time the PREM will reach the high and low points of the day, so you can front run the PREM instead of just sitting and waiting and watching your screen. By knowing in advance when the PREM will hit, you can fine tune your trading to take advantage of these abnormal market situations just like the very good program trading firms do. And with program trading volume running at 60 to 90 percent, it is mandatory for you to have the PREM on your screens and know exactly how to use it. Most platforms do not have PREM. Most data vendors screw it up. And most stock brokers do not even know what it is. So if you have PREM you have a huge advantage over other traders who do not have a clue. If you need help with that contact us and we will help you with it. What about the New York Stock Exchange? What the NYSE PR Department does not want you to know! The New York Stock Exchange quietly moved the Program Trading goal posts a few years ago. Not one trader in 10,000 even noticed it. Neither did CNBC, Bloomberg, or the Wall Street Journal. Did you notice it? Or do you not have a clue about the great volume cover up? Program Trading is a very secret business. And the exchanges want to keep it that way. And especially when program trading becomes 90% of the volume on the NYSE. That volume is very bad for the PR Department obviously. So by bending the rules in accounting and moving the goal posts on the floor, a field goal is only 1.50 points now. And a touchdown is only 3 points. The extra point after a touchdown has been eliminated. In baseball a home run now, is only a double. But still called it a home run, not a double. Pretty cool huh? Each week the NYSE sends out their press release to the media, and each week the media prints all of the information about program trading. The information is true. But based on what? The very best Program Trading Desk know exactly. Therefore, you have to know it too. If you are unaware of this very secret move by the NYSE and do not have a clue what we are talking about, then you should definitely contact us for more information. We will send you additional private links about program trading and the NYSE. What is the best Trading Platform? What about Ninja Trader? NinjaTrader (NT) is only average trading software and depending on your data feed with it, can be one of the very worst trading platforms that you can use. Most likely you are using horrible data and have a horrible platform and have a huge problem. And do not even know it. Which is not good. Since most trading firms like MLCO, BOFA, DBAB, SBSH, and JPMS (and almost all hedge funds) use Bloomberg and Reuters data feeds (which are very similar to almost all data with NT), those firms do not have as good of information as you can have on your very own computer. And by using your computer well, you can blow them up, almost every day. A relatively simple process, once you learn what time to do it. But to do that effectively, you must program into your computer the correct program trading symbols. Symbols that MLCO, BOFA, DBAB, SBSH and JPMS do not even have running correctly on their Bloomberg and Reuters terminals! And therefore, your advantage over them. If you would like to know more about that, and how to set up those symbols, then contact us. Tell us that you are using NinjaTrader and tell us exactly what you would like to know, and we will respond to your request promptly. What is the best Trading Platform? What about thinkorswim? thinkorswim (TOS) is a member of FINRA and clears your trades with TD Ameritrade. TOS is one of the very worst trading platforms that you can use. You are using a horrible platform and you do have a huge problem. Which is not good. Since most trading firms like MLCO, BOFA, DBAB, SBSH, and JPMS (and almost all hedge funds) use Bloomberg and Reuters data feeds (which are very similar to the TOS data feed), those firms do not have as good of information as you can have on your very own computer. And by using your computer well, you can blow them up, almost every day. A relatively simple process, once you learn it. But to do that effectively, you must program into your computer the correct program trading symbols. Symbols that MLCO, BOFA, DBAB, SBSH, and JPMS do not even have running correctly on their Bloomberg and Reuters terminals! And therefore, your advantage over them. If you would like to know more about that, and how to set up those symbols, then contact us. Tell us that you are using thinkorswim and tell us exactly what you would like to know, and we will respond to your request promptly. What is the best Trading Platform? What about Interactive Brokers? Interactive Brokers (IB) may be a decent securities options clearing firm, but IB is one of the very worst trading platforms that you can use. You are using a horrible platform and you do have a huge problem. Which is not good. Since most trading firms like MLCO, BOFA, DBAB, SBSH, and JPMS (and almost all hedge funds) use Bloomberg and Reuters data feeds (which are very similar to the IB data feed), those firms do not have as good of information as you can have on your very own computer. And by using your computer well, you can blow them up, almost every day. A relatively simple process, once you learn it. But to do that effectively, you must program into your computer the correct program trading symbols. Symbols that MLCO, BOFA, DBAB, SBSH, and JPMS do not even have running correctly on their Bloomberg and Reuters terminals! And therefore, your advantage over them. If you would like to know more about that, and how to set up those symbols, then contact us. Tell us that you are using Interactive Brokers and tell us exactly what you would like to know, and we will respond to your request promptly. What if my question is not answered above? Questions like: What about TradeStation? Are your Program Trading Seminars for beginners or rookies? If PREM gives traders an edge. How is it used? What is the TIKI? What about trading the E-mini Futures? What is Index Arbitrage? What about SPY Puts and Calls? If you have other questions like these above simply contact us and ask. There is no such thing as a stupid question when it comes to Program Trading. And we are the only firm in the world that will answer your questions for you. We also have additional pages on our web sites that will answer a lot of your questions for you to study well. If you study Program Trading well, you will be well rewarded. Please click here to contact us