THE TRADING PROFITS OF SOES BANDITS

SOES bandits are individual investors who use Nasdaq's Small Order Exe cution System (SOES) for day trading. Their average profit per trade i s small, but they trade dozens or hundreds of times per week. Bandits usually establish a position before most market-makers have updated th eir quotes, and lay off the position at favorable prices through Insti net or SelectNet. It is noteworthy that they trade profitably with mar ket-makers despite having less information. Bandits keep the profits a nd bear the losses from their trades. Thus they have greater incentive s to trade well than the employees of market-making firms. (C) 1998 El sevier Science S.A. All rights reserved.