Most of your theories depend on you being able to predict the future. I have yet to know someone who can accurately predict he future over the long run. Most of wall street relies on having probabilities on their side by making the spread and receiving commissions (or paying very low commissions).
does hidden order that provides liquidity receives rebates from exchange?
- Thread starter trend2009
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The goal of most people is to make money. The goal of traders is to achieve negative transaction costs so that each trade adds to their bottom line. The goal is to get in and out of trades profitably. Any market maker would understand this concept. Speculators might not understand this concept but they tend not to be around very long.
Also in your example you assume your order is visible and you get hit. In many circumstances your order will be undercut by invisible orders. So your example is easier said than done.
Robert Morse
Sponsor
Let's look at your last trade. Please tell us what you bought, why you bought it and how you determined the timing. If you were not predicting any future change in price, I'd like to hear what you did expect.
I don't have to predict anything. I know that people fear the pain of loss at twice the degree that they appreciate the pleasure of making money. That means stocks fall faster and farther than when they go up. If I make the spread as a thick stock is falling I can buy on the bid or even pay up on the offer and catch the bounce. With zero commission I can buy 5000 shares of a stock that bounces 5 or 6 cents and have a profitable trade.
Robert Morse
Sponsor
So you do not like the term "predict", but you have the assumption that stocks fall faster than they go up and these stocks falling, the next time frame is down? You are predicting the next move is down and not up, no? I do not expect a response. It is clear you are happy with your current platform and offering, and that is great, I'm happy for you. Cheers, Bob
Yes, it does.
Not in all cases. Who is going to buy a buy order that is a limit order at the current bid or a sell order at the current offer? Why would someone pay for an order they can hit for free?
If they like giving up the spread that is fine, they can do that all day long for all I care. You don't do much actually trading, do you?
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Citadel is the answer to your first question. Ask them whether they do much actual trading. You have a long road in front of you.
The price on your order fill.
I have written software to measure this by sending identical orders simultaneously to two different brokers. One order pays commissions and the other is "free". The "free" orders that don't go directly to an exchange would always get a poorer price on the fill and the net result was they would cost significantly more.
So it's not that it's not "free" it's actually more expensive. No one should be surprised by the fact that hidden costs end up costing more.