would IB ever piggy back your trades?
- Thread starter Bluegar3
- Start date
def, I was referring to what dabao91 is referring to, not shaving a penny on SMART orders.
IB is my broker and I dont mean to pick on them, but I find it hard to believe IB or any broker doesnt mirror its clients trades.
say Im a swing trader and my win ratio is about 90%. Lets say I increased my acount 500% this past year.IB has access to this information.At some point greed will take over and an employee at IB could monitor my account and mirror my trades.
or, an employee could monitor my trades, call a friend or family member and have them mirror my trades.
and you say 'IB doesnt do this. End of story'.Is it that simple?Can you vouch for every employee at IB?
cmon, I wasnt born yesterday.
blackguard
def
Sponsor
No, I can not vouch for every employee but we do have very strict internal rules when it comes to trading one's account. Furthermore, client orders via IB hit the exchange in milliseconds. What you suggest would take minutes and have no impact on your system (never mind the fact that would you suggest would be in violation of numerous employment clauses and have severe legal implications).
Finally, if a broker was copying my trades I'd be flattered and would figure out numerous ways to screw them over as I'd always have first mover advantage. I'm sorry but I believe those who worry about a broker piggy backing on their orders should focus more on their trading instead of a what/if would happen if they were successful.
If any brokerage employee did this it would be a sackable offense and might even be illegal.
And besides do you really think IB employees have the time to do this? They have an extremely low head count and those poor guys are probably the most over worked in the industry.
I can only assume you are novice trader and know little about trading psychology and drawdowns.
No one will be able to copy your system through thick and thin, they will pull out at the bottom of the first big drawdown, just before the system gets profitable again.
As for being a swing trader with a 90% win rate and making 500% a year, i assume you think that someone out there has such a system without having big drawdowns??
Well if someone has such a system they wont be trading for very long. They will soon be able to retire with 8 figures in trading profits..
Please let me give a different perspective on the disagreement between HoundDogOne and Def. I think they are each partly wrong and partly right.
I think that IB is an honest company, with honest programmers, and that they do endeavor to get IB customers the best possible executions. Here I agree with Def and disagree with the Dog, as to IB's intentions. I think that compared to the retail brokerage industry, IB does a great job on order execution quality, and I would be surprised to learn about a competitor that can match IB's order execution quality.
I also think that IB's order routing logic could be substantially improved, and that it should be substantially improved. I think that improvements that could be made haven't been made, because IB does overlook opportunities for improvement. I think that HoundDog One has detailed technical knowledge of the failure to make some of these improvements. I think IB's programmers don't recognize the potential for improvement, seen by me and HoundDogOne, because they come at their task more from the programmer's viewpoint than the trader's viewpoint. I think that HoundDogOne makes the mistake of misinterpreting IB's oversights as a bad intent to cheat the customer.
Let me give an example. IB's SMART order routing logic routes orders based on what IB calls "the best price". But what this really means is the best displayed price. IB's SMART order routing logic ignores the critical issue of hidden liquidity. Hidden liquidity means that the best price is often better than the best displayed price. It means that the best displayed price is often not the best price at all. Routing to the best displayed price is often not the best strategy. IB could and should add SMART logic which would, when enabled by the customer, scan for hidden liquidity at prices better than the best displayed price, before SMART gives up and routes to the best displayed price.
The failure to scan for hidden best prices is an example of how IB's SMART is not an optimal algorithm. It is better than any other retail broker's router, as far as I know, but it is not optimal, even though IB advertises it as optimal.
I think that HoundDogOne knows a great deal about other opportunities for improving SMART, beyond just this one example I have described. I think he knows a great deal more than he lets on. I think he is frustrated with IB, because IB doesn't work with him to improve SMART, so he lets off steam in his postings expressing resentment at IB. But he stays there because he gets the best deal from IB.
Many times, I have asked HoundDogOne to give more details about the optimizations which could be made to SMART. I thought his doing so might help get other customers to support making some of those optimizations, and that this would be a win-win for IB and its customers. But HoundDogOne always, always, always ignores me when I ask him to give specifics. My guess is that he won't do it, because it would give away valuable knowledge which helps make him profitable, and because he is unduly pessimistic about IB's unwillingness to consider making improvements in SMART.
My own experience is that while IB has failed to take advantage of some ways that SMART can be improved, they usually do make a change if I do a good solid job of proving that it should be made, and if I am very persistent about requesting attention from somebody having the appropriate level of expertise to evaluate the issue. This has been my experience, even though I have usually been the ONLY customer who detected a specific problem and asked to get it fixed. Cases where numerous customers want a particular improvement to SMART have gotten even better responses.
I really wish that HoundDogOne would work together with other customers and with IB, to improve SMART as much as possible. I think that his approach to his difference of opinion with IB programmers is disrespectful, unfair, and counterproductive. We would all benefit if he would try to make his criticisms in a more cooperative, constructive spirit, and if he would stop interpreting his differences of opinion with IB programmers as a scheme to cheat customers.
P.S. As to the accusation that IB trades against its customers, IB does do this, BUT IB says that it does so honestly. IB claims that in trading against customers, IB never disadvantages the customer's order routing in order to benefit IB. IB claims that in making its own trades, IB's traders never have access to information about orders from IB's customers. Based on my experiences with IB, I believe these assurances from IB, although I can understand why people would be suspicious. The situation of IB trading against its customers does give IB an opportunity to cheat, but it is my belief that IB is an honest company which does not take advantage of that opportunity and does not cheat its customers.
I think that IB is an honest company, with honest programmers, and that they do endeavor to get IB customers the best possible executions. Here I agree with Def and disagree with the Dog, as to IB's intentions. I think that compared to the retail brokerage industry, IB does a great job on order execution quality, and I would be surprised to learn about a competitor that can match IB's order execution quality.
I also think that IB's order routing logic could be substantially improved, and that it should be substantially improved. I think that improvements that could be made haven't been made, because IB does overlook opportunities for improvement. I think that HoundDog One has detailed technical knowledge of the failure to make some of these improvements. I think IB's programmers don't recognize the potential for improvement, seen by me and HoundDogOne, because they come at their task more from the programmer's viewpoint than the trader's viewpoint. I think that HoundDogOne makes the mistake of misinterpreting IB's oversights as a bad intent to cheat the customer.
Let me give an example. IB's SMART order routing logic routes orders based on what IB calls "the best price". But what this really means is the best displayed price. IB's SMART order routing logic ignores the critical issue of hidden liquidity. Hidden liquidity means that the best price is often better than the best displayed price. It means that the best displayed price is often not the best price at all. Routing to the best displayed price is often not the best strategy. IB could and should add SMART logic which would, when enabled by the customer, scan for hidden liquidity at prices better than the best displayed price, before SMART gives up and routes to the best displayed price.
The failure to scan for hidden best prices is an example of how IB's SMART is not an optimal algorithm. It is better than any other retail broker's router, as far as I know, but it is not optimal, even though IB advertises it as optimal.
I think that HoundDogOne knows a great deal about other opportunities for improving SMART, beyond just this one example I have described. I think he knows a great deal more than he lets on. I think he is frustrated with IB, because IB doesn't work with him to improve SMART, so he lets off steam in his postings expressing resentment at IB. But he stays there because he gets the best deal from IB.
Many times, I have asked HoundDogOne to give more details about the optimizations which could be made to SMART. I thought his doing so might help get other customers to support making some of those optimizations, and that this would be a win-win for IB and its customers. But HoundDogOne always, always, always ignores me when I ask him to give specifics. My guess is that he won't do it, because it would give away valuable knowledge which helps make him profitable, and because he is unduly pessimistic about IB's unwillingness to consider making improvements in SMART.
My own experience is that while IB has failed to take advantage of some ways that SMART can be improved, they usually do make a change if I do a good solid job of proving that it should be made, and if I am very persistent about requesting attention from somebody having the appropriate level of expertise to evaluate the issue. This has been my experience, even though I have usually been the ONLY customer who detected a specific problem and asked to get it fixed. Cases where numerous customers want a particular improvement to SMART have gotten even better responses.
I really wish that HoundDogOne would work together with other customers and with IB, to improve SMART as much as possible. I think that his approach to his difference of opinion with IB programmers is disrespectful, unfair, and counterproductive. We would all benefit if he would try to make his criticisms in a more cooperative, constructive spirit, and if he would stop interpreting his differences of opinion with IB programmers as a scheme to cheat customers.
P.S. As to the accusation that IB trades against its customers, IB does do this, BUT IB says that it does so honestly. IB claims that in trading against customers, IB never disadvantages the customer's order routing in order to benefit IB. IB claims that in making its own trades, IB's traders never have access to information about orders from IB's customers. Based on my experiences with IB, I believe these assurances from IB, although I can understand why people would be suspicious. The situation of IB trading against its customers does give IB an opportunity to cheat, but it is my belief that IB is an honest company which does not take advantage of that opportunity and does not cheat its customers.
Most dark pools will take 100 share lots these days under certain conditions. You just need access to them and that varies drastically by firm. IB has access to some (denoted by Darkpool1,2,3 etc in your executions- though I haven't seen them lately). You also get access to a bunch by routing to EDGX. Liquidity is liquidity and dark pools have every reason to allow small executions against their blocks as long as it stays anonymous.
Some or all of the major ECNs provide hidden order types. These are a very large source of hidden liquidity. Hidden orders can generally be sized as small as a one single share odd-lot, or 100 shares, or anything smaller or larger.
Another source of hidden liquidity consists of black-box trading algorithms, which are waiting for the public display of a contra-side price within a desired target range, so that the black box will respond by immediately hitting that displayed price as soon as it is flashed.
Another source of hidden liquidity is the "discretionary" order type supported by many ECNs and I think even by IB and some other brokers. Go read about how discretionary orders work, and you will see that these are a source of hidden liquidity.
Other pools of hidden liquidity are those specifically mentioned by zdreq, but my point is that those are only part of the picture.
IB's own proprietary orders are also a pool of hidden liquidity, with which customers trade whenever they get an execution with IB.
If IB trades with its customer at the best price displayed in the market, this disadvantages the customer and benefits IB, because the best displayed price is inferior to the best price, which might be hidden or might be displayed. The difference between the best displayed price, and the best price (displayed or hidden), is value gained by IB at the customer's expense.
I don't think IB does this out of dishonesty. I think that IB simply doesn't realize that its order routing logic is suboptimal in this regard. I am sure that if customers show that they care about this issue, IB will do the right thing and make the appropriate changes. IB's business model has always been to make money by helping its customers to make money, not by deliberately stealing from customers.
But HoundDogOne's approach of extreme disrespect and accusations of dishonesty will not establish the type of communication needed in order to effect constructive change.