100 shares on illiquid stocks, assuming you're ok with paying the spread, aren't going to get "skimmed". market makers like that type of order flow. if i was you, i would route TWS multipurpose SMART so you have the chance of getting TMBR or the other pools they ping to potentially give you some improvement. otherwise, routing primary only, you'll only ever get the nbbo (assuming no primary hidden). imo, IB's SMART algo actually does a pretty good job and i would definitely try selecting "seek price imporvement". best way to do this is not take anyone's word for it though, measure all of them over a large set of trades and see what works best for you.
IB SMART Routing and BATS/HFT
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100 shares on illiquid stocks, assuming you're ok with paying the spread, aren't going to get "skimmed". market makers like that type of order flow. if i was you, i would route TWS multipurpose SMART so you have the chance of getting TMBR or the other pools they ping to potentially give you some improvement. otherwise, routing primary only, you'll only ever get the nbbo (assuming no primary hidden). imo, IB's SMART algo actually does a pretty good job and i would definitely try selecting "seek price imporvement". best way to do this is not take anyone's word for it though, measure all of them over a large set of trades and see what works best for you.
They will not especially to small traders. It is secret. Preferential order treatments are given to money making traders. Those big traders/institutional making broker $$$$$.
Small Traders will always lose. Big Traders (HFT, HEDGE FUND) with power and money will always front run ya
Thanks @OneLot, helpful perspective.
I suppose I had always figured that order internalization, which I think Timber Hill does, is to their benefit, not mine. It really comes down to a belief about whether they're friend or foe.
On performance measurement, I am still looking for a good way to test actual results across 1000's of orders vs. arrival price (better yet, arrival midpoint) but that's one stat that IB doesn't provide in flex statements (at least I haven't found it yet).
In lieu of that, I've been measuring my fill price vs. end of day price, which IB quantifies as "TransactionMtm" on Activity Statements etc... Clearly lots can happen between the moment my order executed and end of day, but over a large enough sample set, that random noise should cancel out. I currently am pretty consistently underperforming the end of day price slightly, which feels like an execution quality issue.
I suppose I had always figured that order internalization, which I think Timber Hill does, is to their benefit, not mine. It really comes down to a belief about whether they're friend or foe.
On performance measurement, I am still looking for a good way to test actual results across 1000's of orders vs. arrival price (better yet, arrival midpoint) but that's one stat that IB doesn't provide in flex statements (at least I haven't found it yet).
In lieu of that, I've been measuring my fill price vs. end of day price, which IB quantifies as "TransactionMtm" on Activity Statements etc... Clearly lots can happen between the moment my order executed and end of day, but over a large enough sample set, that random noise should cancel out. I currently am pretty consistently underperforming the end of day price slightly, which feels like an execution quality issue.
http://www.zerohedge.com/news/2014-...rontrun-hfts-interactive-brokers-has-solution
Slide 12 on the feb 2014 IB investor presentation says IB do not internalise or sell order flow. The question for IB then is what does IBdark route do?
I suspect it doesn't. What benefit would that provide IB? The purpose of smart routing is to monetize order flow and still provide good executions.
Hard to balance.
1245
They stated many times they don't sell orderflow to third parties. The benefit would be more profitable clients that have bigger accounts and trade for more commissions
I'm not sure what to tell you. They route option orders to DMM on the option exchanges and get paid. One of those entities is Timber Hill. On the equity side I believe they route orders to a dark pool 1st then to the ECNs and get paid for order executed by directing orders to that equity MM. Timber hill is also a participate of option and equity dark pools.