The theory is that it mutes volatility. Although there is no question that the volatility is down from the dot-com years, I would not be surprised to find that, if you compare percentage (momentum) moves of today with percentage (momentum) moves pre-dot-com era, that they would pretty much coincide. People want to blame everything on pennies. Usually those people were not trading back pre-'98. My guess is they had an effect, but not nearly as much as people attribute to them. nitro
FYI Nitro, Your execution agent, (I believe in your case IB) does not necessarily absorb a cancel charge every time you cancel a trade. The fee is based on the number of fills vs the number of cancels on a monthly basis.
Yes.... I'm sure IB is making a nice killing on those fees. Like Nordic says, they are not always charged and the fee is less than 1.20. Add to that, the fact that CBOE instituted a monthly fee cap......
Nordic, No, this part of my trading is not with IB. This is with the proprietary group I am with. However, I have tried this as an experiment with IB, and when I get my statement the next day, I see the cancel fees then, not at the end of the month. nitro
and the list will quickly grow to over 200. (IB will shortly be offering clients more order types so they can better control what they send into the PIP. BTW, we don't make a killing off of cancel/modify fees as there is a real cost to throughput.
I wonder is they haven't had more of an effect than we think. MM's depend on certain , let's call them strategies, to get the price to where they want to do business. In the good old days, they would move stick 1/8, 1/4, maybe 2 or 3 of those levels. Now, they can dance around within 3-10 cents for the same effect. I don't think this affects large moves, only the scalping type moves.
Dude, That's my point. At the end of the month, IB ( or who-ever your execution agent is) will end the month on the plus side in fills vs. cancels. Therefore they will not absorb any cancel fees. :eek: