So how come they allow this front run bs?
- Thread starter Nofear777
- Start date
WOW. I find that absolutely unbelievable. I can hardly EVER get filled on passive orders. When I am trading momo, not truly scalping, but trying to fade momo either way, I can almost never get filled on limit orders.
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or you got filled partially.... or you always last in line and got filled after everyone else, even if your order was one and only displayed before somebody else join same price and all got filled and seller is now selling at your bid.please note, that no retail brokers display those sub penny orders properly. they all displayed as number with 2 decimal points. very few brokers (MB for example)display executed orders in T&S properly. on top of that most likely some % of those trades are not reported anywhere,if executed via dark pools. there is zero transparency in US stock markets
It doesnt matter if he is scalping, longterm, swing. He, I, anyone who is using full penny increments, we are getting screwed.
We have to constantly pay the spread, and for any professional trader not HFT, it is death by a thousand cuts as someone eloquently put it. For you to sit there and say it doesn't hurt us shows your lack of knowledge.
You talk about "whats a penny or 2" . Its dollars. Billions of dollars being sucked right out of the unprivilidged traders pocket, be it an institution, or a retail guy.
Sub-pennying happens all day, but it isn't as noticeable in liquid securities, because the spread is only one cent. (Typically, your buy order is not filled until the stock is offered at your price, but on liquid issues that is only one cent, so fills are still common on passive orders.) Are you trading relatively liquid issues?
Thats because the person trying to hit your bid with a market order first routed their order (knowingly or unknowingly) through a dark pool by way of an Indication of Interest. Once this is done, the nature of their order becomes public knowledge and others can act on it (in this case, getting a better bid into market before the market order gets there). At this point, it's quite easy for an HFT to step in and "sub-penny" your bid. The seller gets a better print than they otherwise would have (and is happy) and the HFT succeeds in picking up shares (also happy), which they will quickly flip. You're left wondering what happened and why your bid wasn't hit (not happy at all). (note this generally works to the advantage of small participants and to the disadvantage of large participants in the market for obviousl reasons).
Blame the seller, not the HFT for routing their order to a dark pool first in search of a better execution than the NBBO. Had the seller simply hit the bid on the exchange where you'd posted it (rather than routing dark first), you'd have gotten your shares. Instead they chose to try to better that level and ended up doing just that.
Problem that I see is that you are blaming the wrong entity. The HFT is not to blame for you not getting the shares you sought, the HFT is simply acting rationally based on the information available.
The problem is one of market structure (which has obviously changed with the advent of dark pools among other changes both structural and regulatory related). Dark pools are clearly benefitting certain sectors of the market and disadvantaging others (traders like yourself specifically). Fix the structure and the subpennying will go away.
How to implement the fix? Thats the hard part. You're basically arguing that investors (the entity on the other side of the trade you're trying to execute) deserve worse fills than they are presently getting. That's not going to sit so well with a lot of market participants.
