*Where* are NYSE stocks actually traded?

[yellow4yield]

If you are buying a NYSE stock from an online broker such as Ameritrade or ETrade, are all trades done at the NYSE only?

Or do some of these trades trade "in house" at the brokers or somewhere other than the NYSE?

Then so far as the NYSE "book" (www.nyxdata.com - ArcaBook Web), does this include limit buy/sell orders from online brokers like Ameritrade or ETrade? Or are some limit orders "hidden" from the NYSE book?

Say the NYSE book says this...
Ask
100 5.50
100 5.51
100 5.52
200 5.53
etc.

Then I buy 700 shares with a limit order of 5.52, then the order is instantly executed; 200 shares partial at 5.50 and 500 at 5.51! Why?

 

[Scrooge_McDuck]

Hello, I'll try to answer as best I can

No, not all trades occur on the exchange on which a stock is listed. Quite a bit of volume is traded on other exchanges called ECNs (http://en.wikipedia.org/wiki/Electronic_communication_network). Although NYSE now has their own ecn, NYSE arca. You can even trade NYSE stocks using NASDAQ if you can believe it. Although this assumes direct market access, I'm not sure about etrade etc, I think they can cross trades internally so your trade might be with another client and wouldn't see the exchange first but I'm just guessing on this one.

As for your second question, you basically entered a market order instead of a limit order. The inside ask (100 shares at 5.50 in your example) is the lowest price someone is willing to sell that stock. The inside bid is the highest price someone is willing to buy at, probably 5.49 in your case, and would decrease for other bids, eg, 5.48, 5.47 etc. If you wanted to use a limit order in this example you should put your order in at 4.49 or less depending on what you want to pay. By putting in a limit buy order for a higher price than the inside ask you just said that you are willing to pay a premium (which is the spread), which is what a market order is. And if you want to know why 200 shares traded at one price and 500 at another even though only 100 shares were listed in the book for that price it's because 100 shares is the minimum required for displaying a limit order, the rest can be hidden. I hope I explained it well

 

[yellow4yield]

Hummm...

So if the book says 100 at 5.50, there *could* be 1000 more shares for sale at 5.50, but they are "hidden"?

So I guess I can't see any accurate "book" anywhere which will show me what all is for sale including broker internal and ECN?

Basically I want to buy say 3000 shares in the above situation, but I don't want to drive up the price. And I don't want to rack up tons of brokerage fees with zillions of separate trades.

So I guess the best strategy (knowing there may be more than 100 for sale at a given price) would be to buy 3000 with a limit order (not to exceed) maybe the 3rd ask price down? Then just see what happens?

Or perhaps it would be a better strategy to buy 1000, then wait a bit, then buy 1000 more, wait, then the final 1000? (3 separate trades, keep the price down.) FYI - This is for low volume stocks, high volume, no problem with my trades.

 

[Scrooge_McDuck]

Yep, there's no way to know exactly how many shares there are available due to hidden orders. There are HFT algos that try to sniff out the presence of large orders but thats a whole different game. I'm not sure what's the best way to minimize slippage but I would recommend limit orders especially in low volume stocks, if you were trading something like SPY you wouldn't have to worry about slippage.