Going by what you say, you seem to be putting a lot of trust in your broker. To the average Joe, it would be highly troubling to discover that a broker can trade against its customers and cheat them at its discretion. Whether it does so or not is besides the point. The mere fact that a broker can do this to a client is disturbing.
would IB ever piggy back your trades?
- Thread starter Bluegar3
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Going by what you say, you seem to be putting a lot of trust in your broker. To the average Joe, it would be highly troubling to discover that a broker can trade against its customers and cheat them at its discretion. Whether it does so or not is besides the point. The mere fact that a broker can do this to a client is disturbing.
Checking for hidden liquidity may be theoretically possible, but I don't think it is very practical. The only way a broker could do that is to post a limit bid/offer, wait some time (maybe less than a second), cancel if no fill, wait for a confirmation, try the next pool, etc. Many customers (myself included) are more concerned with quick fills with the visible quotes. Checking for hidden liquidity sounds like a highly specialized application that I would not expect a broker like IB to invest in.
Less risky to take the opposite side.
John
It's hard to know what to think... first of all, I highly doubt that these hidden pools are that far away from the visible bid/ask that I see. Is that mistaken? In a stock like C trading at $30.05, how far away are these pools? Sounds like this is an issue for very high frequency scalpers.
On the other hand, if IB is filling me short 1000 at $30.05 but is actually selling the stock at $30.06 to a hidden pool, that's a nice business and that's also my $10.
Yes, I do put a lot of trust in IB.
Scanning for hidden liquidity would not be appropriate for orders which the customer has the most extreme urgency to trade. This is why I have always suggested that hidden liquidity scans should be a feature which each customer can enable or disable for each order. Many customers would rather slightly delay most of their executions if it means they can get better execution prices. You, it appears, would not want hidden liquidity scans, because you don't want any delay, not even a fraction of a second. But your personal trading doesn't reflect the needs of everybody else.
First, please stop talking about hidden liquidity "pools", and instead talk about hidden liquidity in general, much or most of which is not contained in hidden pools. I just explained this a few postings ago.
Second, I have no idea what the numbers would look like. The only way to find out would be to build hidden liquidity scanning into SMART and then test to see how much of a benefit it gave. Different stock symbols would receive different benefits at different times, so that the design of any test procedure could greatly alter the results.
For Stocks only:
Routing via Smart may not be the best way to route your orders. Many if not most of my orders when targeting the inside bid and when there was enough liquidity on the inside bid failed to hit the inside bid when routed through Smart. This example is when you are trying to sell and the reverse would apply for buy orders. In the case of NYSE stocks my order would post as the inside offer on NYSE instead of hitting the inside bid and on Nasdaq stocks my order would post as the inside offer on Inet or Nsdq as it is termed these days again failing to hit the inside bid.
It maybe a matter of rebates. I also find that very rarely do I get fills on Arca. I have to insert a codicil here in saying that I need to determine this pattern over a longer period of time and see if it holds true. However, based on what I've observed so far I believe Smart is not the best way to route your orders.