Trading Advantage: Institutional vs Retail

[Robert Morse]

Would users of such a system expect to get better prices then they could by placing an order on one of the exchanges? Or would the prices be the same or worse, with the benefit just being the ability to easily trade in size?

I have no knowledge of this RFQ system.

I can tell you that KCG/Knight had one years ago. The purpose was not to find liquidity but to control order flow and control the payment for order flow model and move it way from the option exchanges. It subjected the orders to a small number of players vs one of the 15 public option exchanges where all market makers and customers can see it. It is was an option dark pool. There was no white papers to show it was best for the customer.

 

[dozu888]

the conventional wisdom is that retail has some size advantage that he can get in/out easy... that's what they want you to think.

the US is such a liquid market, even if institutions may have trouble move individual stocks, few will have trouble hedging with futures.

the biggest difference, is the big guys control the media... they can push whatever bogus stories at any time they want... and the sheep who read websites and newspapers everyday just get brain washed and get slaughtered.

after all, the control of brain, is the biggest difference maker.... everything else is secondary.

 

[FSU]

retail has zero advantage.

Disagree with this. Huge advantage in options in certain products of being first in line on a trade before any MM or professional trader. Very useful in tight markets like the VIX. Here an option could be 2,000 up, .10 wide and if you put a bid or offer in as a retail customer, you will be first.

Also your costs will be much lower for data and exchange fees.

 

[qxr1011]

What do you guys think some of the advantages are for both institutional and retail traders

institutional traders' first and foremost advantage over retail crowd - OPM to which they shift the risk, and of course their place in the market (i actually do not call them traders at all, they are just executioners of orders, collecting markup, commissions, fees, and other spoils, froth, scum and spume afforded by their position)

retail traders ( and by them i mean not wannabes but those who trade their own money for living) has only one advantage over institutions - they have a method build on found market rules and patterns and are able to successfully apply it

 

[Robert Morse]

Disagree with this. Huge advantage in options in certain products of being first in line on a trade before any MM or professional trader. Very useful in tight markets like the VIX. Here an option could be 2,000 up, .10 wide and if you put a bid or offer in as a retail customer, you will be first.

Also your costs will be much lower for data and exchange fees.

Also, the maker-taker option schedule for DMA provides better rebates to priority customers.

FSU, I thought VIX options got rid of customer priority with regard to the order book about 2 years ago, when a few customers started to place 10,000 lot orders on the strikes with the most volume. The MMs got angry that an they were getting shut out.

 

[FSU]

Also, the maker-taker option schedule for DMA provides better rebates to priority customers.

FSU, I thought VIX options got rid of customer priority with regard to the order book about 2 years ago, when a few customers started to place 10,000 lot orders on the strikes with the most volume. The MMs got angry that an they were getting shut out.

Bob, haven't been trading the Vix as much lately but I think customer priority is still there. They are still charging a .20 "customer priority fee"
http://www.cboe.com/framed/pdfframe...section=SEC_RESOURCES&title=CBOE Fee Schedule

I will check it out further.