Fidelity offers Zero Comm on 25 iShare ETFs
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Fido is, as you'd expect, being compensated by the ETF sponsors. A bit of the management fee is being kicked back to Fido. I don't see anything abnormal or improper about that, and it's clearly indicated in Fido's small print.
How is what Fidelity's alleged action any worse than IB kicking its orders to its Timber Hill unit through its "smart" routing and calling it "price improvement"?
(For the record, I don't hate either of these firms, but to me it looks like they're doing approximately the same thing here -- please correct me if I'm wrong.)
So they sell your orders and the market makers take a few ticks on the spread for some initial adverse movement on your position. Does any of this matter if you're swing trading these products, holding for more than a day? Isn't price eventually going to try to correlate to the benchmark, basically?
So what is wrong with paying a small commission and tarde what you want and not be restricted on 25 ETFs? If you don't mind on paying 2 cents extra, why not just pay the commission. I also agree with you that if you make a good trade, market maker effect won't have any effect.
The things that I don't like about Fidelity are:
1- You can not trade between 9:15 to 9:30. You can trade from about 5AM to 8PM to IB.
2- If you want to use, margin, their rate is over 8% unless you borrow very large amount of money. Check out IB's commission.
3- You can not daytrade in your 401K account. I have brokeragelink account which is linked to my 401K and I can not trade in that account because it is considered cash account !!
Correct me if wrong, but I don't see the "2 extra cents"... I checked a couple of examples and the spread on eSignal was the same shown on Fidelity ATP.. when the spread was .02, the MARKET was at 2 cents, not Fidelity.
Thought I'd relay the info I just received on a call to Fidelity during this slow day.
Apparently there is no limitation to the frequency of trading with these commission-free ETFs, but the catch is they aren't marginable for 30 days, meaning that for daytrading you have to have the cash on hand to account for 3 day settlement on each trade. You're not going to be able to do 3 intra-day round trips of 1k shares of IWM (@ $65) with a $100k account, as I understand it.
Apparently there is no limitation to the frequency of trading with these commission-free ETFs, but the catch is they aren't marginable for 30 days, meaning that for daytrading you have to have the cash on hand to account for 3 day settlement on each trade. You're not going to be able to do 3 intra-day round trips of 1k shares of IWM (@ $65) with a $100k account, as I understand it.