Good brokers vs. BAD brokers

Quote from intradaybill:

Their model is simialr to that of a casino. No casino needs one particular player but it needs many players to make money. One dollar is nothing but 100,000 dollars is something. By allowing their HFT bots through subsidiaries to front run customer market orders brokers make billions, 1/10 of a cent at a time. Learn how to multiply:)

P.S. Although I believe IB is a better broker than others I have dealt with.
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Thanks for the info, it clarifies why they would want to front-run market orders.
Can you explain how they can make money out of front-running limit orders ? I can't see it right now, but maybe there is a way.
 
Quote from cvds16:

jesus, do you really think Ib needs to frontrun your GIGANTIC order ?
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It's not about my puny little orders I'm worried about, but it's a matter of principle.
I just want to understand what I am agreeing to when I sign their papers.

If, indeed, I'm agreeing to let them front-run or delay my orders as much as they want, maybe I'd like to look elsewhere not because I'm worried about the losses they might cause me but because I want to give my money and my business (as little as it is) to a GOOD broker.
Does this make sense to you ?

So the question still stands: by signing this form, am I letting them front-run my orders ?
Anyone knowledgeable who can answer this ?
 
Read up on the history of IB: they were making tons of money before they ever had any clients. No need to be paranoid. But they have to put that there cause they are making markets. Making markets is not the same as frontrunning. I am pretty much convinced they don't frontrun.
 
Quote from cvds16:

But they have to put that there cause they are making markets. Making markets is not the same as frontrunning.
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I don't understand why a market-maker needs this clause in their customer agreement.
Could you explain ?
 
on some exchanges there is priority for the market maker in options, so they can get executed while the customer won't be, in other words as a broker IB will still hold the order, while as an option market maker they will be trading. This is not a conflict of intrest in the true sense imo but is because of the dual role IB has, so legally they have to put this out there.
I am a former options market maker for a subsidiary of a bank. I later used to trade options through IB (like 20 - 30 trades a day) and did an equal number of stock/futures trades to hedge. They did a pretty good job at that. I am not using them now, cause I moved over to trading fx after cancellation costs started (I was picking pennies in front of steamrollers lol, so that didn't work anymore) and am now trading through oanda cause for that I find them better. I wouldn't hesitate to go back to IB if I was trading stocks / options / futures again. Don't forget too your money is quite safe at IB and they have a wide range of markets. Not all brokers can say likewise. So imo they are good.
 
Quote from cvds16:

on some exchanges there is priority for the market maker in options, so they can get executed while the customer won't be, in other words as a broker IB will still hold the order, while as an option market maker they will be trading.
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Thanks for the explanation. Could you tell me the exchanges where this rule applies ?
 
it's been too long since I really traded options and went into those details. I believe ICE is one of those exchanges were MM have priority over customers.
 
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