How important is it to select 'Routing' In equity orders?

[longshortwhatever]

Hello,

I understand the logic behind market maker selection (Routing) when placing orders (limit,market) and I understand that some have a better book than another, but can somebody explain to me if it's really relevant in placing orders?

I mean, when a normal liquid volume stock is trading during hours, the screen that shows the market depth per market maker is jumping up and down like a madman. Yes, they group them together with the same color but most of the time this is all over the place!

So my question is, how do you experienced traders do it, do you just use the routing SMART or INTELLIGENT or anything that is being set up by your broker or do you select a certain market maker? What is the criteria to select which one? It changes just too fast for me to analyse what they have on their books.
Do you always select the same market maker per stock? What about options? What is your benefit?

Thanks for helping me out on this one. I read that I'm leaving money on the table by not selecting a route but I don't know how to handle this one practically.

 

[Robert Morse]

I understand the logic behind market maker selection (Routing) when placing orders (limit,market) and I understand that some have a better book than another, but can somebody explain to me if it's really relevant in placing orders?

I going to say that because of REG NMS, I would not take too much time choosing this unless your goal is to minimize fees. Each exchange and ECN has it own cost structure.

the screen that shows the market depth per market maker is jumping up and down like a madman.

These are not all market makers. Many are customers orders either sent manually or automated.

Since we offer both SMART routes and DMA, this is what I suggest for my clients that want to manage their fees. For before and after market trading, I prefer NASDAQ or ARCA (I have no data as to what is best). For taking liquidity during trading hours, I would set up a hot key/hot button using our LSPT route (Cost $0.0015/share-this is half of what most ECNs charge). For adding liquidity, I would set up my hot key/hot button using NASDAQ or ARCA. For the open and close, we direct those orders to the primary listed exchange only. For STOP and trailing STOP orders, we suggest EDGX on Lightspeed Trader as those are server based stop orders and not held locally. This will vary from platfrom to platfrom if not a Lightspeed customer.

Bob