Value of Smart Order routing at IB

W

WALLACE29

I am new at tradeing at IB
I would like to trade thru a full function platform. The only platforms that I could find at this time that perform these functions are Esignal and Medved QuoteTracker.
I believe any orders executed thru these platforms can only be routed thru the IB smart order routing system.
My question is:
Is this the best route for trading at IB?
I typcally trade 300 to 2000 shares, sometimes traded intraday, sometimes held overnight. I am not greedy, I am not looking for every last cent. Will the Smart order routing suit my needs?
My past expierience was with Ameritrade. My last trade with them was with 600 shares of a $30. stock that traded at a volume of 2m shares a day. They executed that transaction at 10 cents below the bid price. I quess this is their way of the fullfilling their 10 second trade execution guarantee. When I saw this trade come across the the tape, I knew it was time to move on.
Any opinions about the IB smart order routing system would be greatly appreciated.
 
Wallace, in my opinion, SMART will suite you just fine. I daytrade and swing trade. I never use anything but SMART (for Naz, stick to direct routing for NYSE). It's easy and quick. FYI- Stock Watch Pro is also integrated for trading for level 2 with IB. IB just announced improvements to their API to allow direct routing through these other platforms. It costs a bit more, and I'm not sure how long it will be before these software providers take advantage of these features. Having said that, I still think SMART is just fine. I constantly read threads, especially about ARCA, about all kinds of problems with direct routing. With SMART, the computer does it for you.
 
Quote from WALLACE29:

[...]
Is this the best route for trading at IB?
I typcally trade 300 to 2000 shares, sometimes traded intraday, sometimes held overnight. I am not greedy, I am not looking for every last cent. Will the Smart order routing suit my needs?
My past expierience was with Ameritrade. My last trade with them was with 600 shares of a $30. stock that traded at a volume of 2m shares a day. They executed that transaction at 10 cents below the bid price. I quess this is their way of the fullfilling their 10 second trade execution guarantee. When I saw this trade come across the the tape, I knew it was time to move on.
Any opinions about the IB smart order routing system would be greatly appreciated.
More...

IB is ok, but if you make market orders you will always risk to be filled well away from the nbbo.
 
Limit orders imho are the way to go, but not for the reasons you may suspect. To get into a position, place your limit no further from the price than you're willing to chase the stock. When you want to get out, like now!, place a limit order with the limit far away from the current price. This makes sure the price won't blow by without getting filled. You will NOT get filled far away from the NBBO, you'll get filled at the best price available in the moment. I do this all the time. This is better than using market orders only because of the way routing algorithms work. Essentially, market orders are queued up after limit orders, so you in theory get filled faster with a limit order. Having said that, I have NEVER gotten a bad fill on naz market orders at IB trading in 500 share lots. I experimented just to see what would happen. Check out IB's web site for more details on order routing, it really if very useful to understand the nuances.
 
bundlemaker said:
Limit orders imho are the way to go,

Agreed

When you want to get out, like now!, place a limit order with the limit far away from the current price. This makes sure the price won't blow by without getting filled.

This is not necessarily true. If you enter a sell limit order at 75 when the stock is trading 76 and there is suddenly news that the company loses a prime contract, there could suddenly be no buyers above 70, and you will not get filled. Market orders are the only way to guarantee a fill, assuming a stock does not cease trading.

You will NOT get filled far away from the NBBO, you'll get filled at the best price available in the moment.

The best price available can be outside the NBBO in times of high volatility or when ARCA is stuck (usually you can tell because the market will be crossed - with the bid higher than the ask). For NYSE stocks, the bid/ask in times of high volatility may be stale by the time you see it, and may not represent the actual market for the stock for up to a couple minutes

This is better than using market orders only because of the way routing algorithms work. Essentially, market orders are queued up after limit orders, so you in theory get filled faster with a limit order.

That's exactly backwards. Market orders come first in every market I can think of. At worst, they would be on a time priority with limit orders - never behind them.

For the average swing trader, SMART is fine, and use a market order if you want to guarantee a fill.
 
One thing to add. SMART enables access to the TMBR route. If filled via The TMBR route you'll get virtually instant executions at a price at or better than the NBBO.
 
Quote from def:

One thing to add. SMART enables access to the TMBR route. If filled via The TMBR route you'll get virtually instant executions at a price at or better than the NBBO.
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Especially true for the ETFs. I find TMBR to be as fast or faster than ISLD was before the quotes became hidden. I never use SMART for the ETFs because if it goes to the NYSE good luck getting filled down there. I set TMBR as the default routing for the QQQ/SPY/DIA
 
Quote from Tech Analysis:



Especially true for the ETFs. I find TMBR to be as fast or faster than ISLD was before the quotes became hidden. I never use SMART for the ETFs because if it goes to the NYSE good luck getting filled down there. I set TMBR as the default routing for the QQQ/SPY/DIA
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Tech Analysis:
how do you set your default routing to TMBR?
The available routes for QQQ on my TWS are: SMART, AMEX, ARCA, INSTINET, ISLAND, NYSE, PRIMEX, RDBK.
Thanks.
 
i can verify that what def says is true. TMBR is an excellent routing choice. NO. I DO NOT WORK FOR IB NOR WAS I COMPENSATED. just my experience
 
Quote from PXG:



Tech Analysis:
how do you set your default routing to TMBR?
The available routes for QQQ on my TWS are: SMART, AMEX, ARCA, INSTINET, ISLAND, NYSE, PRIMEX, RDBK.
Thanks.
More...

TA

I'm with PXG here, how do you set TMBR as the preferred route?

Does SMART automatically route to TMBR because if it does you say if you use SMART then it might go down to the NYSE 'and good luck there'.

I know you know what's going on, it's just there's some confusion here.

CB
 
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