Adding liquidity question..

[kcgoogler]

So here is what my understanding is about adding liquidity.

Say SPY is trading at 100.00-100.01 (Bid-Ask); i put in a limit order to buy/cover 100 shares at 100.00 or sell/short at 100.01 - in both cases my order sits on the order book until someone takes it out. So i am adding liquidity.

Correct/wrong?


So if my commisions were say 0.004/sh and i trade only limit orders as above, and i route it to say NASDAQ with a 0.002 rebate/share; my effective commisions are 0.002/sh.



thanks!
-gariki

 

[rmorse]

Quote from kcgoogler:

So here is what my understanding is about adding liquidity.

Say SPY is trading at 100.00-100.01 (Bid-Ask); i put in a limit order to buy/cover 100 shares at 100.00 or sell/short at 100.01 - in both cases my order sits on the order book until someone takes it out. So i am adding liquidity.

Correct/wrong?


So if my commisions were say 0.004/sh and i trade only limit orders as above, and i route it to say NASDAQ with a 0.002 rebate/share; my effective commisions are 0.002/sh.



thanks!
-gariki

Correct....As long as your broker is allowing you DMA and offering you the rebates.

 

[Don Bright]

You're correct, and we can also get paid for "taking liquidity" by using our smart order router or picking the proper destination, like PHX or CBSX etc.

Don