Does Schwab Limit Price Improvement for Very Heavy Trading?

[murray t turtle]

Can someone explain this “price improvement” thing to me

Is it just something with no commission brokers?
If they’re able to improve your price that means they’re giving someone else a worse price so how does that work out

%%
I'll use SCHW example + something else also.
NBBO
Bid \ask=$25.26 by 25.30, filled @25.29, penny price improve. IF memory serve me right+ it usually does ,maybe limited to SP 500 related stocks, check that?
[2]Actually they could sell QQQ for most anything they want; they bought or own a % of it /cost basis maybe $ 55. NOT saying they sell it for 55/LOL just a point[Account pending with them, so far so good.]
[3] This is not really price improve , but can be better, standing order for a correction. I pay up sometimes also because i study trends+ NO body works for nothing..............

 

[Fain]

Changing brokers would be complicated right now. Not sure where they were routing since I wasn't really paying attention to that before

That's the key to understand. Most times where I noticed changes in routing, I look at the execution venue.

Telling customer service at the brokerage that you feel in your gut that executions have got worse won't help. Most customer service don't even understand Smart Routing and how fragmented the markets are.

 

[mskl]

Y know about that one, but keeping it under that limit. Btw they already count. I know people that got the notice

fyi:

There is NO current rule on any Equity Exchange that treats retail order flow as "professional". However there is one in the pipeline at the IEX.

Anyone who got the "390 notice" would be traders in the Options market. This rule has existed since 2009.

 

[wpost]

You would think that it applies to options, and that's how the actual rule on the SEC website is written, but not everyone reads the fine print and ends up applying the 390 rule to every type of asset class. Some brokers have sent 390 rule notices to equities traders. Maybe it's an oversight, or maybe how dare you as an individual try to trade like a "real" pro. Whatever the reason it's not good to be labeled a >390 pro. Supposedly your order does not get non-pro preferential representation and there's always the chance your free trade commissions will go away. Those poor professional traders, beating your bid by .0001. You wouldn't want to lose your advantage of a non-pro.

 

[murray t turtle]

Your posts are getting increasingly incomprehensible with every reply. You appear to be accusing me of having errors in my posts, but you don't give any examples. Other than that, I'm not sure what point you are trying to make.

%% OK;
stop whinning about market makers, as if anyone works for nothing. Sorry if thats not clear; whinning is an error but if you dont see that's ok its your business.....................................................................

 

[cruisecontrol]

%% OK;
stop whinning about market makers, as if anyone works for nothing. Sorry if thats not clear; whinning is an error but if you dont see that's ok its your business.....................................................................

You're way off the mark. I am pro markets and pro market makers. What I'm against is monopolies and anticompetitive practices. Thoughtful criticism of the status quo =/= whining.

 

[freeman311122]

So I have been trading at Schwab using market orders only in quantities of 1,000 to 2,500 shares usually trading AAL and HAL. I had been getting exceedingly good execution consistently since July, then at the beginning of Feb in my taxable account and today in my Roth it's like I got put in "price improvement jail?" I trade a lot, approximate 500-600 round trips per day. I usually only go for a penny, sometimes two. Trading 20-45k I've been averaging $1,700 to $2,000 plus per day. I do it by evaluating the level two screens, taking into consideration market maker/institutional head fakes. I have quite a bit of trading experience and like to keep things simple. My strategy depends on price improvement because if I'm wrong I get out and take very little to no loss. But when I only buy at the ask and sell at the bid this strategy doesn't work. They're still letting me trade and I've received no notifications from them I've done anything wrong. I'm assuming this is Schwab and not the market maker? I'm also hoping this is temporary in that this is an effort by them to ensure more even distribution of price improvement going to other investors? Any info other experiences you've had would be appreciated. thx!

can you please describe what kind of price improvement you have observed? How much more than the bid price when you sell and how much below the ask price when you buy? Thanks a lot!

 

[j_medved]

I have been trading my Fidelity account for the past week. Frequently they would fill the sell order at the ASK (I know, I was shocked) and midway between bid/ask . For example, the following is a bunch of trades within maybe 5 min period. All SELL orders were placed at the BID (3rd column). All buys were at the ASK. The spread most of the time was 1 penny. Maybe 2 very briefly.

Used to be that TD Ameritrade (now owned by Schwab) had similar price improvements. Now they disappeared.

 

[freeman311122]

I have been trading my Fidelity account for the past week. Frequently they would fill the sell order at the ASK (I know, I was shocked) and midway between bid/ask . For example, the following is a bunch of trades within maybe 5 min period. All SELL orders were placed at the BID (3rd column). All buys were at the ASK. The spread most of the time was 1 penny. Maybe 2 very briefly.
View attachment 261903

Used to be that TD Ameritrade (now owned by Schwab) had similar price improvements. Now they disappeared.

I have been trading my Fidelity account for the past week. Frequently they would fill the sell order at the ASK (I know, I was shocked) and midway between bid/ask . For example, the following is a bunch of trades within maybe 5 min period. All SELL orders were placed at the BID (3rd column). All buys were at the ASK. The spread most of the time was 1 penny. Maybe 2 very briefly.
View attachment 261903

Used to be that TD Ameritrade (now owned by Schwab) had similar price improvements. Now they disappeared.

Thank you!

For the buy order, the 3rd column is the ask price?

 

[j_medved]

For the buy order, the 3rd column is the ask price?

Yes. As you can see the first BUY order (lowest in the list) got filled 0.03 lower. Overall, that one set of orders alone was over $160 in price improvements. That adds up fast.