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Fischer Black also came up with a system that did not involve market makers, a bid, or an ask. The downside is that you don't know what price you'll get and/or how long your order will take to fill (I don't remember whether it was "and" or "or" in the prior sentence, but that's not important)...

I think it made sense under the old specialist system -- they probably wouldn't bust a trade if it would bankrupt the specialist, obviously -- but in the electronic era where there are potentially millions of different counterparties, it's often very unfair; some small traders had their accounts...

I'd like to think that's true, but IB's routing report states: This looks like B/D internalization to me, given that IB and Timber Hill have the same owner. But granted, there's a lot of moving parts here (e.g., directed orders such as the one BATS allowed then withdrew). Or is the...

IB is one of the largest HFT's for options (through their Timber Hill, which, until recently at least, was by far the largest source of the group's profits), and they reserve the right to trade against customer order flow at their discretion. The trouble with this is that the "best available...

The OP's question is actually nontrivial because under the Canadian system (or so I have read), you can end up with your trading gains taxed as income rather than capital gains under certain circumstances (therefore doubling your tax rate); whereas in the US, the short-term capital gains rate is...

Maybe because ARCA, Nasdaq, BATS provide the BBO at the time. Why should the liq taker who wants to take immediately suffer cost of 1c (or more) per share rather than pay a take fee of 0.3c per share? US equities are a fragmented morass and it's far more complex than simply selecting...

For (1), I would say the opposite is true. In my experience, C/C++ has far more libraries, and of greater maturity, than does Java, at least for the types of things that algorithmic traders tend to do; e.g., math-heavy computation. (2) I would largely agree with, although there's a lot of...

That's absurd -- or are you posting from an alternate universe that has different physical laws? You can have perfectly free movement of capital and goods with no physical movement of workers whatsoever.

The real issue isn't so much the tax rate, but the byzantine and consumption-encouraging manner in which things are taxed (or not taxed, or subsidized). The US generally taxes productivity and profitability rather than consumption. Coupled with the pork-barrel politics of deductions/subsidies...

€20,000? :D That's almost a slap in the face to anyone who would want to trade professionally. If that's all someone cares to trade with (or aspires to trade with), they're almost certainly hobbyists -- few, if any, traders who earn a living at it could survive long-term with such a small...

Interesting post -- thanks, Lights. I'd be surprised if there aren't still some winners, but overall it must be getting more competitive, with spreads shrinking continually and algorithms getting ever more refined. My guess is that the arms race for lower latency is probably way overdone, in...

Maybe the US government should pass a law that only iceman1, Occam, and people less intelligent than either Occam or iceman1 are allowed to trade. :D :D :D :D :D

A better chance of what? What exactly is a broke American going to do in a very poor country with sky-high murder and unemployment rates? I can't imagine a good outcome from this, unless they're sent as a missionary or some sort of NGO worker with the backing of a well-heeled org.

There's some truth to this, but it's a pretty misleading comparison. Wannabe lawyers/doctors fail in a way that's very obvious and predictable. Wannabe doctors who have made it into any US med school very seldom "fail"; and wannabe lawyers in top-10 law school programs tend to do pretty well...

Good points. In addition to that, I'd propose the following principle, which would strongly disincentivize many of the situations that lead to brokerage failure: A brokerage is NOT a bank. Its purpose is to represent its clients in buying and selling of assets, as well as to serve as...

Could be true. The broker probably should have let you know sooner, but I'm not sure they're under any legal obligation to do so. In some cases you can appeal these sorts of things to the exchange, but it's generally not worth it, as there's also a charge of something like $1000 for a...

You should be able to route to any available route for any part of your trade -- it's your broker/clearing firm/platform's job to keep track of your positions (unless you're using a raw FIX implementation and/or sponsored access, in which case it's YOUR job, which the nature of your question...

I've never worked for a broker. Your criticisms have varying amounts of relevance for a lot of fims, but MF Global didn't internalize (at least not in the sense of retail firms), and at the ground level a lot of the employees did serve their customers well and take their needs seriously.

I have an old account with them that I barely use anymore, and it seems very poor for short-term trading (although if you want to buy/hold their own mutual funds, it may be OK :D). I can't direct orders, and they try to interalize my order flow to a point that beggars belief -- recently, I saw...

Very interesting point, FreeMarketRider. The biggest of the big banks may be privately cheering the fall of MF Global and the (perhaps unnecessary) ensuing mess, and not just for the reduction in competition, but also for the crippling effect it could have on open, centrally cleared markets...