Switching to lite

[trendmomentum]

This is constantly repeated like its gospel, and proof is never given

Let's see hard proof your order is not filled at the best bid/offer in a timely manner

If there's no proof forthcoming, then I will assume the folks pimping this nonsense are full of crap, 2000 posts or not.

Ha ha. In this day and age questioning in what way one might get screwed over is probably not so wise when there are a dozen proven ways. For example, you could sit the whole day on the bid and not get filled, even if you constantly adjust the price. If you send a marketable limit order, most often than not you might get what you wish for without any price improvement etc.

A better question to ask would be would there be any proof that ib pro delivers a beter execution service than lite? There are only a finite ways that this could indeed be so.

The proof is in the pudding.

 

[GRULSTMRNN]

The proof is crystal clear: with pro you get to route directly, with payment for orderflow your order gets raped to earn the same money the commission charged order commands. Do you seriously think hedge funds pay brokers a fortune in exchange for nothing?

Ha ha. In this day and age questioning in what way one might get screwed over is probably not so wise when there are a dozen proven ways. For example, you could sit the whole day on the bid and not get filled, even if you constantly adjust the price. If you send a marketable limit order, most often than not you might get what you wish for without any price improvement etc.

A better question to ask would be would there be any proof that ib pro delivers a beter execution service than lite? There are only a finite ways that this could indeed be so.

The proof is in the pudding.

 

[trendmomentum]

Absolutely. That is the initial business disclosure. Just need to to keep an eye on it that in the long run or in any run for that matter, the pro orders do not get commingled internally with the lite ones. You know, Chinese wall and all.

 

[Maverick2608]

Orders get raped no matter whether they are sold or not. The market maker is willing to pay for the right to be the rapist.

The question is whether orders are getting more raped when they are sold. IB’s average execution price would suggest that, but it probably depends on order type and venue.

 

[R1234]

This is constantly repeated like its gospel, and proof is never given

Let's see hard proof your order is not filled at the best bid/offer in a timely manner

If there's no proof forthcoming, then I will assume the folks pimping this nonsense are full of crap, 2000 posts or not.

Some members on ET like to post voluminous drivel using big language just for the sake of posting or maybe to keep themselves occupied somehow....

I plan to start some tests on this stuff in the near future. Not just comparing IB Pro versus Lite but also IB Lite versus Fidelity and TDAmeritrade which are both zero comm.

It's not transparent how and where the order flows are sold so I assume there will be daily variability in fill quality among these brokers. Therefore I will need a fairly large sample size and will report my findings here on ET when I get to it.

 

[GaryBtrader]

IB needs to pay for zero commission somehow. If they are selling the order book then the retail investor is going to lose in some way.....poor fills, lack of execution, etc. I would rather pay $1 to get more predictable and better trades. If you're trading highly liquid, high priced stocks the IB commissions are minuscule. The average Nasdaq 100 stock price is about $190. I can trade $38K of this for $1 (0.003% in commissions). I can live with that.

 

[Maverick2608]

If they are selling the order book then the retail investor is going to lose in some way.....poor fills, lack of execution, etc.

If you use IB Pro, your order is still exposed to Citadel, Virtu etc. using sub-pennying, co-location, faster cables between different exchange servers (as described in Flash Boys) etc. One of several ways we lose is due to market makers sub-pennying limit orders until the market moves, which they see faster than the rest of the market participants due to co-location and faster cables, after which they take your limit order leaving you with an execution that is already at a loss.

The question is: Will you lose more if your broker sells your order than you lose today. Possibly. Maybe because of increased latency. I'm not sure. Only testing will reveal that.

The fact that market markers are willing to pay for the order does not automatically mean you are better off using direct market access where no one pays for your order, because maybe they are willing to pay for your order to secure a profit that they otherwise would have had to compete with other market markers to secure. Other market makers that have access to the same advantages.

 

[spindr0]

The proof is crystal clear: with pro you get to route directly, with payment for orderflow your order gets raped to earn the same money the commission charged order commands. Do you seriously think hedge funds pay brokers a fortune in exchange for nothing?

This isn't a challenge but a curiosity. If I'm hitting the bid or the ask, how am I going to get raped? Shouldn't IB be routing me to NBBO even if I'm on Lite? Or will it exile me to the hinterlands where liquidity is an issue? TIA

 

[Maverick2608]

This isn't a challenge but a curiosity. If I'm hitting the bid or the ask, how am I going to get raped? Shouldn't IB be routing me to NBBO even if I'm on Lite? Or will it exile me to the hinterlands where liquidity is an issue? TIA

If the the number of shares at the best bid or ask is sitting on one specific exchange server or your order is small enough to get filled with the shares sitting on one server, you will most likely not get raped. Otherwise you will get raped as described in detail in Michael Lewis' Flash Boys.

But you will carry the cost of the spread. That is not rape, but a cost you might not have had to incur were it not for the HFT market makers.

 

[GRULSTMRNN]

And of course what you plan on doing is not the most useless pursuit? You know that you don't have to try everything in life just to know for sure how something is like, right? We have an intellect and can use logic and deduction to inform ourselves. I don't need to open a lite account to know it will provide hugely inferior fills, most likely higher financing cost in the future too. But please go ahead, use your next few weeks to figure out how all I said works out in detail.

Some members on ET like to post voluminous drivel using big language just for the sake of posting or maybe to keep themselves occupied somehow....

I plan to start some tests on this stuff in the near future. Not just comparing IB Pro versus Lite but also IB Lite versus Fidelity and TDAmeritrade which are both zero comm.

It's not transparent how and where the order flows are sold so I assume there will be daily variability in fill quality among these brokers. Therefore I will need a fairly large sample size and will report my findings here on ET when I get to it.