Scottrade slippage and execution

U

urrterrible

Would you all mind looking at my opening trade from Thursday Jan 22nd that I was pissed about the execution and slippage. The email from Scottrade follows... I am wondering if this is normal slippage and if the 18 second gap is abnormal(2nd pic). I had a stop in at 8.71 and I bought the shares back at 8.76 and 8.77 that is why Scottrade adjusted my buy back to 8.75.

http://img209.imageshack.us/img209/7284/luvvyzb0.jpg
http://img209.imageshack.us/img209/2316/luvexecutionee5.jpg

You can see in the first pic that I had major slippage on the Selling short of LUV and then in the 2nd pic you see the terrible execution when I had a stop loss in at 8.71, lol.

Questions:
1) Would this happen at IB or other brokers?
2) Do you see the TIME GAP between my first Buy To Cover and the huge Buy To Covers(18 seconds).

Anyone think this is abnormal?

Response from Scottrade:
Dear xxxx,

Thank you for your e-mail.

When your order triggered, the market center to which your order was directed told our Trading Department that there were 33,300 shares ahead. Under normal conditions this would be a good execution since there were that many shares ahead. Orders can easily take over a minute to fill in these circumstances. Based on a great relationship with our market makers, however, the market center decided to accommodate your order. They changed the price to $8.75 on all shares. This adjustment was made to your account on 1/23/09.
Please let us know if we may be of further assistance.

Sincerely,

National Service Center Team Lead 2-10 PM
Scottrade Inc.
 
Hmmm, I don't really have an answer, because I'm not sure how all of this order routing stuff works with market orders, but I'm not so sure I like what I see here. I wonder if Don Bright is still on this board, I would love to hear what he has to say about this.
 
Quote from urrterrible:



Questions:
1) Would this happen at IB or other brokers?
2) Do you see the TIME GAP between my first Buy To Cover and the huge Buy To Covers(18 seconds).

3)Anyone think this is abnormal?



.
More...

1) Not necessarily.

2) Yes.

3) Not for Scottrade.

I suggest you read the broker reviews for this company. Then, read other reviews to see if one is possibly more suitable to your particular needs. And, the above poster is correct in recommending the use of limit orders, but you run the risk of a partial fill.
 
I do not want partial fills so I will not use limit orders. I hold stock for less than 2 minutes usually. I only trade when there is a lot of action and tight spreads so I will never get trampled over, this was by far the worst I have seen. I was just curious to see if others have knowledge of Scottrade doing this. I have read reviews and I am wondering if anyone has direct knowledge of IB or other brokers having better execution.
 
You hold stocks for less than 2 minutes?

You are a scalper and need a Direct Access broker. IB has the most extensive list of reviews on this site, so you may want to pore over them ( I have never used IB so I cannot comment).
 
Scottrade routed your order to a market-maker, who can profit by giving a bad trade price. The market-maker then paid a reward to Scottrade (but not to you).

This is called "payment for order flow".

Knowledgeable traders avoid trading thru a broker who allows execution prices to be compromised by "payment for order flow".

You should have read the fine print before you traded thru this broker. Here is Scottrade's disclosure of payment for order flow, contained in its SEC Rule 606 report for 3Q 2008, which you can verify at http://www.marketsystems.com/msi/reports/index.html?clientid=SSIC:

Go back to report
Disclosure Information:

Disclosure Information:


Material Aspects of Relationships with Route Venues
Scottrade, Inc. Third Quarter 2008

I. Securities Listed On the New York Stock Exchange:

[TRIM]
Scottrade, Inc. receives payment from Knight Capital arkets
LLC (Trimark), a subsidiary of Knight Trading Group, Inc.,
for orders in listed stocks. Payment is variable based on
order and execution types. Payments during third quarter
2008 averaged at or below $0.001 per share.

Scottrade's principal shareholder and President is a
shareholder of Knight Trading Group, Inc.


[CDRG]
Scottrade receives payment from Citadel Execution
Services for certain types of orders in listed stocks.
Payment is variable based on order and execution types.
Payments during third quarter 2008 averaged at or below
$0.001 per share.


[AUTO]
Scottrade receives payment from Automated Trading Desk
Financial Services, LLC for certain types of orders in
listed stocks. Payment is variable based on order and
execution types. Payments during third quarter 2008
averaged at or below $0.001 per share.

Scottrade's Director of Trading Services is a shareholder of
Citigroup. Automated Trading Desk is a subsidiary of
Citigroup.


[UBSS]
Scottrade receives payment from UBS Securities LLC
for certain types of orders in listed stocks. Payment is
variable based on order and execution types. Payments
during third quarter 2008 averaged at or below $0.001 per
share.





II. NASDAQ Securities:

[NITE]
Scottrade receives payment from Knight Equity Markets,
LP (a subsidiary of Knight Trading Group, Inc.) for certain
NASDAQ and OTC orders. Payment is variable based on order
and execution types. Payments during third quarter 2008
averaged below $0.001 per share.

Scottrade's principal shareholder and President is a
shareholder of Knight Trading Group, Inc.


[AUTO]
Scottrade receives payment from Automated Trading Desk
Financial Services, LLC for certain types of orders in
NASDAQ and OTC stocks. Payment is variable based on order
and execution types. Payments during third quarter 2008
averaged at or below $0.001 per share.

Scottrade's Director of Trading Services is a shareholder of
Citigroup. Automated Trading Desk is a subsidiary of
Citigroup.


[CDRG]
Scottrade receives payment from Citadel Execution Services
for certain types of NASDAQ and OTC orders. Payment is
variable based on order and execution types. Payments
during third quarter 2008 averaged at or below $0.001 per
share.


[UBSS]
Scottrade receives payment from UBS Securities LLC for
certain types of NASDAQ and OTC orders. Payment is
variable based on order and execution types. Payments
during third quarter 2008 averaged at or below $0.001 per
share.





III. Securities Listed on the American Stock Exchange or
Regional Exchanges:

[TRIM]
Scottrade, Inc. receives payment from Knight Capital
Markets LLC (Trimark), a subsidiary of Knight Trading
Group, Inc., for orders in listed stocks. Payment is
variable based on order and execution types. Payments
during third quarter 2008 averaged at or below $0.001 per
share.

Scottrade's principal shareholder and President is a
shareholder of Knight Trading Group, Inc.


[CDRG]
Scottrade receives payment from Citadel Execution
Services for certain types of orders in listed stocks.
Payment is variable based on order and execution types.
Payments during third quarter 2008 averaged at or below
$0.001 per share.

[AUTO]
Scottrade receives payment from Automated Trading Desk
Financial Services, LLC for certain types of orders in
listed stocks. Payment is variable based on order and
execution types. Payments during third quarter 2008
averaged at or below $0.001 per share.

Scottrade's Director of Trading Services is a shareholder of
Citigroup. Automated Trading Desk is a subsidiary of
Citigroup.


[UBSS]
Scottrade receives payment from UBS Securities LLC
for certain types of orders in listed stocks. Payment is
variable based on order and execution types. Payments
during third quarter 2008 averaged at or below $0.001 per
share.




IV. Exchange-Listed Options:

Options Order Routing Disclosure:

[SBSH]
Scottrade receives payment from Citigroup Global Markets
Inc. for certain types of option orders routed to them for
execution on an option exchange. Payment is determined
based on a schedule provided by Citigroup. Payments in
third quarter 2008 averaged at or below $0.70 per contract.

Scottrade's Director of Trading Services is a shareholder
of Citigroup.



[MLCO]
Scottrade receives payment from Merrill Lynch/Broadcort
Execution Services for orders routed to them for execution
on an option exchange. Eligibility for payment is
determined by the executing market center or Specialist.
Payments in third quarter 2008 averaged at or below $0.70
per contract.


[CES]
Scottrade receives payment from Citadel Execution Services
for orders routed to them for execution on an option
exchange. Eligibility is determined by the executing
market center or specialist. Payments in third quarter
2008 averaged at or below $0.70 per contract.


[SUSQ]
Scottrade receives payment from Susquehanna International
Group for orders routed to them for execution on an option
exchange. Eligibility is determined by the executing
market center or specialist. Payments in third quarter
2008 averaged at or below $0.70 per contract.
 
Quote from jimrockford:

Scottrade routed your order to a market-maker, who can profit by giving a bad trade price. The market-maker then paid a reward to Scottrade (but not to you).

This is called "payment for order flow".

Knowledgeable traders avoid trading thru a broker who allows execution prices to be compromised by "payment for order flow".

You should have read the fine print before you traded thru this broker. Here is Scottrade's disclosure of payment for order flow, contained in its SEC Rule 606 report for 3Q 2008, which you can verify at http://www.marketsystems.com/msi/reports/index.html?clientid=SSIC:

Go back to report
Disclosure Information:

Disclosure Information:


Material Aspects of Relationships with Route Venues
Scottrade, Inc. Third Quarter 2008

I. Securities Listed On the New York Stock Exchange:

[TRIM]
Scottrade, Inc. receives payment from Knight Capital arkets
LLC (Trimark), a subsidiary of Knight Trading Group, Inc.,
for orders in listed stocks. Payment is variable based on
order and execution types. Payments during third quarter
2008 averaged at or below $0.001 per share.

Scottrade's principal shareholder and President is a
shareholder of Knight Trading Group, Inc.


[CDRG]
Scottrade receives payment from Citadel Execution
Services for certain types of orders in listed stocks.
Payment is variable based on order and execution types.
Payments during third quarter 2008 averaged at or below
$0.001 per share.


[AUTO]
Scottrade receives payment from Automated Trading Desk
Financial Services, LLC for certain types of orders in
listed stocks. Payment is variable based on order and
execution types. Payments during third quarter 2008
averaged at or below $0.001 per share.

Scottrade's Director of Trading Services is a shareholder of
Citigroup. Automated Trading Desk is a subsidiary of
Citigroup.


[UBSS]
Scottrade receives payment from UBS Securities LLC
for certain types of orders in listed stocks. Payment is
variable based on order and execution types. Payments
during third quarter 2008 averaged at or below $0.001 per
share.





II. NASDAQ Securities:

[NITE]
Scottrade receives payment from Knight Equity Markets,
LP (a subsidiary of Knight Trading Group, Inc.) for certain
NASDAQ and OTC orders. Payment is variable based on order
and execution types. Payments during third quarter 2008
averaged below $0.001 per share.

Scottrade's principal shareholder and President is a
shareholder of Knight Trading Group, Inc.


[AUTO]
Scottrade receives payment from Automated Trading Desk
Financial Services, LLC for certain types of orders in
NASDAQ and OTC stocks. Payment is variable based on order
and execution types. Payments during third quarter 2008
averaged at or below $0.001 per share.

Scottrade's Director of Trading Services is a shareholder of
Citigroup. Automated Trading Desk is a subsidiary of
Citigroup.


[CDRG]
Scottrade receives payment from Citadel Execution Services
for certain types of NASDAQ and OTC orders. Payment is
variable based on order and execution types. Payments
during third quarter 2008 averaged at or below $0.001 per
share.


[UBSS]
Scottrade receives payment from UBS Securities LLC for
certain types of NASDAQ and OTC orders. Payment is
variable based on order and execution types. Payments
during third quarter 2008 averaged at or below $0.001 per
share.





III. Securities Listed on the American Stock Exchange or
Regional Exchanges:

[TRIM]
Scottrade, Inc. receives payment from Knight Capital
Markets LLC (Trimark), a subsidiary of Knight Trading
Group, Inc., for orders in listed stocks. Payment is
variable based on order and execution types. Payments
during third quarter 2008 averaged at or below $0.001 per
share.

Scottrade's principal shareholder and President is a
shareholder of Knight Trading Group, Inc.


[CDRG]
Scottrade receives payment from Citadel Execution
Services for certain types of orders in listed stocks.
Payment is variable based on order and execution types.
Payments during third quarter 2008 averaged at or below
$0.001 per share.

[AUTO]
Scottrade receives payment from Automated Trading Desk
Financial Services, LLC for certain types of orders in
listed stocks. Payment is variable based on order and
execution types. Payments during third quarter 2008
averaged at or below $0.001 per share.

Scottrade's Director of Trading Services is a shareholder of
Citigroup. Automated Trading Desk is a subsidiary of
Citigroup.


[UBSS]
Scottrade receives payment from UBS Securities LLC
for certain types of orders in listed stocks. Payment is
variable based on order and execution types. Payments
during third quarter 2008 averaged at or below $0.001 per
share.




IV. Exchange-Listed Options:

Options Order Routing Disclosure:

[SBSH]
Scottrade receives payment from Citigroup Global Markets
Inc. for certain types of option orders routed to them for
execution on an option exchange. Payment is determined
based on a schedule provided by Citigroup. Payments in
third quarter 2008 averaged at or below $0.70 per contract.

Scottrade's Director of Trading Services is a shareholder
of Citigroup.



[MLCO]
Scottrade receives payment from Merrill Lynch/Broadcort
Execution Services for orders routed to them for execution
on an option exchange. Eligibility for payment is
determined by the executing market center or Specialist.
Payments in third quarter 2008 averaged at or below $0.70
per contract.


[CES]
Scottrade receives payment from Citadel Execution Services
for orders routed to them for execution on an option
exchange. Eligibility is determined by the executing
market center or specialist. Payments in third quarter
2008 averaged at or below $0.70 per contract.


[SUSQ]
Scottrade receives payment from Susquehanna International
Group for orders routed to them for execution on an option
exchange. Eligibility is determined by the executing
market center or specialist. Payments in third quarter
2008 averaged at or below $0.70 per contract.
More...


What he said.
 
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