Understanding Order Routes - Request for Assistance

C

cwb1014

Can anyone recommend a good resource that explains in relatively straightforward English the various order routes that are available to traders in placing direct-access orders for NASDAQ, NYSE, and AMEX stocks. The ideal resource would contain an explanation of the relative advantages and disadvantages of each route as well as any restrictions that may apply to a particular route.

Any help that anyone can offer on this would be greatly appreciated. I'm relatively new to trading and really want to understand order routes and execution well.

Thanks again.

Adios,

cwb1014

:cool:
 
This is actually a good question for more experienced traders as well. Routing options have changed a lot in the past year. Might be a good idea for Baron to get someone from Townsend to do a chat on it.
 
Quote from AAAintheBeltway:

This is actually a good question for more experienced traders as well.
More...

Yup, very confusing stuff. Having taken the series 55, as many of us have, it is still confusing (maybe more so).

Speaking with the operations people at whatever firm you clear your trades through should give you a clearer idea of what happens in your specific situation.

For further confusion, you can always count on the NASDAQ:

http://www.nasdaq.com/about/market_mechanics.pdf
 
The Order Routing Table at HardRightEdge.com is a great resource, but so much has changed in the last year, it needs to be completely updated. Anyone want to help update it? Maybe BankerBlueChips?
 
Quote from Lancer:

The Order Routing Table at HardRightEdge.com is a great resource, but so much has changed in the last year, it needs to be completely updated. Anyone want to help update it? Maybe BankerBlueChips?
More...

I just had a chance to look over the Order Routing Table at HardRightEdge and it looks like it was an outstanding resource in its day.

Is any of it still accurate?

Please let us know.

Many thanks in advance.

Adios,

cwb1014

:cool:
 
Hello,

I reviewed some of the referenced stuff here, and more. Since I have no DA experience, there are a few issues that are still left unanswered. I'd be grateful for any hints, as it might affect my broker selection.

1) Does Selectnet preferencing works fast enough for daytrading strategies? If you preference a MM, this costs less than if you go thru an ECN. However, my understanding is that the MMs have quite some time to decide about the order, and eventually I mightn't get a fill in time, while the price moves away.

2) Assume I enter a larger order for a stock. Do smart/auto routes able to execute it between different ECNs/MMs? E.g. I enter an order for 5000 stocks and I get a fill in three parts, 2000 on ISLD, 2000 on ARCA and 1000 from an MM. Is it how it works?

3) Sources say there's an order matching on ISLD (and other ECNs). What does it mean practically? Assume I want to buy 5000 stocks (market order). Assume there are two offers on ISLD on best ask, both for 1000 stocks (altogether 2000), and there's another offer at best ask + 0.01 for 5000 stocks. How would my market order execute? Would it match with the 5000 stock at best ask+0,01, or would it execute 2000 on best ask and the remainder for best ask+0,01?

4) Does anyone have experience with Primex and Supermontage? These are not mentioned on the reference link, what are the advantages and disadvantages of these systems?

Thanks a lot
mic414
 
Quote from mic414:

Hello,

I reviewed some of the referenced stuff here, and more. Since I have no DA experience, there are a few issues that are still left unanswered. I'd be grateful for any hints, as it might affect my broker selection.

1) Does Selectnet preferencing works fast enough for daytrading strategies? If you preference a MM, this costs less than if you go thru an ECN. However, my understanding is that the MMs have quite some time to decide about the order, and eventually I mightn't get a fill in time, while the price moves away.

2) Assume I enter a larger order for a stock. Do smart/auto routes able to execute it between different ECNs/MMs? E.g. I enter an order for 5000 stocks and I get a fill in three parts, 2000 on ISLD, 2000 on ARCA and 1000 from an MM. Is it how it works?

3) Sources say there's an order matching on ISLD (and other ECNs). What does it mean practically? Assume I want to buy 5000 stocks (market order). Assume there are two offers on ISLD on best ask, both for 1000 stocks (altogether 2000), and there's another offer at best ask + 0.01 for 5000 stocks. How would my market order execute? Would it match with the 5000 stock at best ask+0,01, or would it execute 2000 on best ask and the remainder for best ask+0,01?

4) Does anyone have experience with Primex and Supermontage? These are not mentioned on the reference link, what are the advantages and disadvantages of these systems?

Thanks a lot
mic414
More...

(1) I believe selectnet was replaced by supermontage. They would definitely move away from their bid/ask if the market was moving.

(2) Each one has its own protocol and you should review what you will be using to understand how they work. In general, I think your description is accurate for a market order.

(3) I think the latter. It would take the cheap stock first.

(4) Never used them.
 
For someone swing trading odd lots on IB with very liquid stocks, what is important to know about order routing? Is it best to just select smart order routing? Thanks.
 
Quote from Corso482:

For someone swing trading odd lots on IB with very liquid stocks, what is important to know about order routing? Is it best to just select smart order routing? Thanks.
More...

When trading odd-lots in listed securities, make sure you use a stop w/ limit rather than just plain stop orders if using stops.

I found out the hard way a couple of weeks ago that when trading odd-lots, if there is an unusually wide spread, the specialist can fill you at the bid (for sell stops) or the offer (for buys), and the trade doesn't even have to be posted.

What happened to me was I was short an odd-lot of FNM and placed a buy stop to cover at 72.55. At the opening, there was a huge spread (even though this is a very liquid stock). When my stop price of 72.55 was hit, I was filled at 73.24! Also, my fill was never posted and the market didn't trade up to 73.24 until hours later.
 
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