Liquidity Trading

[Bob777]

Didn't some Canadian broker just get busted for doing this on Island ECN? Some of the traders at this office were making something like 12-19k a day.

If I remember right, Island stated they have a policy against flipping stocks for rebates and require anyone caught to return all rebate fees.

 

[lojze]

Can somebody explain theory behind "rebates/flipping"?

Thank you in advance.


Lojze

 

[rs7]

What I don't understand is this....
A few guys I know just started working at Nextrade to add liquidity.

From what they told me (and maybe I misunderstood), they got paid x for adding liquidity, but had to pay about 3x when they did not. So it would seem they would have to be almost perfect in their trades. And that's on a "scratch". What about losers?

Seems very difficult the way it was explained to me.


RS7

 

[wideopen]

every ecn has it's own regulations on liquidity. usually you get 1.75$/1000shr/after charges/ on added liquidity and you are billed 3 or 4 times more on subtracting liquidity. go read the fee schedules for members on each ecn. I don't know how difficult it is to make money this way because I am just starting with the firm but there is guys and gals to learn from. to me this is the only way to beat the zero-sum paradigm in the long term!

 

[Brandonf]

Originally posted by rs7
What I don't understand is this....
A few guys I know just started working at Nextrade to add liquidity.

From what they told me (and maybe I misunderstood), they got paid x for adding liquidity, but had to pay about 3x when they did not. So it would seem they would have to be almost perfect in their trades. And that's on a "scratch". What about losers?

Seems very difficult the way it was explained to me.


RS7

Thats exactly what I thought. It seems like the perfect way to be "right" 90% of the time and still go broke in the process.

Brandon

 

[daniel_m]

Originally posted by wideopen
every ecn has it's own regulations on liquidity. usually you get 1.75$/1000shr/after charges/ on added liquidity and you are billed 3 or 4 times more on subtracting liquidity. go read the fee schedules for members on each ecn. I don't know how difficult it is to make money this way because I am just starting with the firm but there is guys and gals to learn from. to me this is the only way to beat the zero-sum paradigm in the long term!

well, you might want to reconsider whether or not the 'zero-sum paradigm' is actually accurate or not.. (if it isn't, then it doesn't really require 'beating' ..)

my opinion? liquidity 'trading' is for suckers

 

[Brandonf]

Originally posted by daniel_m


well, you might want to reconsider whether or not the 'zero-sum paradigm' is actually accurate or not.. (if it isn't, then it doesn't really require 'beating' ..)

my opinion? liquidity 'trading' is for suckers

<i>liquidity "trading" is for suckers </i>

The broker who thought of it is one smart SOB.

B

 

[wideopen]

lol
maybe i am a sucker
wish ya luck with your "trading"
best to all of you

 

[daniel_m]

dude, i'm not saying liquidity 'trading' can't make you money..far from it.. i bet there's heaps of people that ARE making money from it..

i'm saying you are a sucker if you think what you are doing is really 'trading'...

 

[rs7]

A bit more on my take of this thing...fwiw..

I don't know if this is for "suckers". I am not in a position to really evaluate it.

But....

Nextrade is paying these guys a (very) minimal salary to "learn" how to trade. Then they give a small salary ($500 a week I think...but I bet not for very long). So I had to ask myself, if this is something you can't make money in, why are they paying them to train and trade?

Here is my guess. This is just sort of an advertising budget to them. If they get to be known as a real ECN, then possibly they can get traders (or more specifically firms) to direct trades to them in the future. Otherwise, I have no idea why they would pay these people.

Does this make any sense? Or am I really missing something here? I get called by these people a few times a week. I can't see how it is possible to be so right on so many shares of stock. It seems for every loser you need a whole bunch of winners to catch up.

Hope I am wrong. And I wish the best of luck to all who try it. Including a few good friends that are now trying to find a way back into trading after their firms closed their doors, or in some cases "downsized".

RS7