TD Ameritrade and Think or Swim Option Market Maker Scam
- Thread starter tradelosses
- Start date
I know how limit orders work but a few times I forgot to set the limit order due being in a hurry or being tired and got the awful default fill. This happened three times over a year and finally on the 4th time I decided to make a threat about it. The problem is a better fill exists which TOS does not honor. Let's say the bid is $46 and the ask is $50 and I want to sell the option. It defaults to $46 and gets executed at the price even though it could have been done at $46.5 or something on the actual marketplace. Now TOS has a 50 cent profit on that order at your expense instead of honoring the best price
Seems like everyone is defending TOS for possibly unethical practices .
Okay you need to do some reading.
Order book example of your 46 bid/50 ask.
43.00----- 4 contracts
44.00 -----3contracts
45.00------2 contracts
46.00------1 contracts.
47.00----- none available
48.00------none available
49.00------none available
50.00------ 2 contracts
51.00-------6 contracts
52.00-------3 contracts
Etc
Now with this example the current NBBO( national best bid offer ) is 46/50
Bid46/50ask. And for simpler well say there's two types of orders. Limit and market.
If you wanted to buy 1 contract right away (market order)at the best price, with that order book shown, you'd receive 1 contract at 50$. If you wanted to sell an order right away( market order), you'd sell at 46.00.
Now if you wanted more then 1 it would run through the book. Say you want to sell 6 contracts right now( this means using market order you'll be filled instantly at whatever the book has. You could get filled very poorly passed the last quote if markets move fast or dry up in liquidity) so at 6 contracts your you'd end up selling one at 46, two at 45 and 3 at 44.
Now if your willing to wait and have a price you'd like to get in you can use a limit order. So you want to buy but you don't want to buy at 50.00. You could enter a limit order anywheres and wait for markets to move your way as orders go through the book. You could also maybe go above the best bid(buyer) who is at 46.00 right now or place a limit above at let's say 47.00. Your now the best bid. Nothing says this will fill as markets can quickly go up and limit orders will be placed higher then yours putting you behind the queue .
Nobody's defending TOS. You just have no clue how markets work.
That was a very simple example and go read some more on order flow or something.
With this example where do you think TOS could get you your contracts at 46.50 in your example? No one is willing to buy there. At the moment you sell with your market order the best buyers price is 46.00.
Order book example of your 46 bid/50 ask.
43.00----- 4 contracts
44.00 -----3contracts
45.00------2 contracts
46.00------1 contracts.
47.00----- none available
48.00------none available
49.00------none available
50.00------ 2 contracts
51.00-------6 contracts
52.00-------3 contracts
Etc
Now with this example the current NBBO( national best bid offer ) is 46/50
Bid46/50ask. And for simpler well say there's two types of orders. Limit and market.
If you wanted to buy 1 contract right away (market order)at the best price, with that order book shown, you'd receive 1 contract at 50$. If you wanted to sell an order right away( market order), you'd sell at 46.00.
Now if you wanted more then 1 it would run through the book. Say you want to sell 6 contracts right now( this means using market order you'll be filled instantly at whatever the book has. You could get filled very poorly passed the last quote if markets move fast or dry up in liquidity) so at 6 contracts your you'd end up selling one at 46, two at 45 and 3 at 44.
Now if your willing to wait and have a price you'd like to get in you can use a limit order. So you want to buy but you don't want to buy at 50.00. You could enter a limit order anywheres and wait for markets to move your way as orders go through the book. You could also maybe go above the best bid(buyer) who is at 46.00 right now or place a limit above at let's say 47.00. Your now the best bid. Nothing says this will fill as markets can quickly go up and limit orders will be placed higher then yours putting you behind the queue .
Nobody's defending TOS. You just have no clue how markets work.
That was a very simple example and go read some more on order flow or something.
With this example where do you think TOS could get you your contracts at 46.50 in your example? No one is willing to buy there. At the moment you sell with your market order the best buyers price is 46.00.
I use OptionsHouse on my phone - they have a button that puts the order in between the bid and ask (basically creating a limit order). It does not always hit 100% of the time but its nice feeling when it does. This is one of the reasons why I don't use ThinkorSwim bec I have to manually put in the mid price takes up to much time and i have start making calculations.
I know how an order book works.
You can get filled between the quoted bid and ask. TOS makes money from those who think you can't or who are careless and accidentally accept the default price.
When this happened to me awhile ago, I had placed single option order accidentally at the ASK. Then 10 seconds later I entered another 1-lot option using a limit order , which filled 30 (I don;t know how much it was exactly since it was months ago but I know it was a lot less) cents less than the ASK. The underlying did not change at all.
Between the posted BID and ASK there are possible fills that TOS is NOT honoring, and that is wrong.
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tradelosses .......... If you think you are getting ripped-off with Market Orders then switch to Limit Orders. I'm sure you know the meaning of:
"Fool me once, shame on you. Fool me twice, shame on me."
You should have switched to Limit Orders after your first unsatisfactory Market Order.
"Fool me once, shame on you. Fool me twice, shame on me."
You should have switched to Limit Orders after your first unsatisfactory Market Order.
Some exchanges actually support hidden orders, so no broker is going to show those for you. It's also possible that the times you received a fill at a price better than the quoted NBBO is because they were selling your order flow. When your order is routed to an entity (ie citadel) who is buying your flow they are required to provide price improvement (but this often means a 1/10th of a cent). However, there's no way for you to know what those hidden prices are, so to state that you know that you could have received a better fill is merely conjecture unless you can actually SEE that quote from some source AND prove that the quote was even still available at the time your order was sent to the exchange. Even if a particular quote bliped on your screen for a moment, someone else's order could have beat yours to the exchange that held that order.
At one point during this thread I thought you were implying the following happened:
46/50 at the time you open your order screen, then the price moves say to 47/49 before you click the button to submit your order and then you get filled at 46/50 even though NBBO had moved to 47/49 between the time you opened your order entry window and when you submitted your order.
As such, I'm not entirely sure what is going on because it's not clear to me, that said, I'm pretty sure the SEC would have fined them many times by now if they're doing what you're accusing them of.
You can default to buy on bid and sell at offer on TOS.
And even if you don't set the default, TOS always shows you the mid price. It's been that way for 15 years.
TradeLosses, You see the spread and know your experience with the order entry system. Open the Active Trader Ladder and just select a better price. It should enter as a limit order at that point. I use TOS and know what you're referring too. But there is nothing illegal about it, simply a wide spread on options. Trade a more liquid contract, use limits, or stop trading.
