Coat-tailing/mirroring PSA

Discussion in 'Prop Firms' started by Vikram Ravishankar, Dec 23, 2016.

  1. At some prop firms, coat-tailing/mirroring their traders’ trades is a common practice.

    How it works: algos, humans tucked away in a developing country or both follow traders into positions. This is generally damaging to the followed traders because it causes competition for and saturation of liquidity - the followed traders often get less shares at a worse price.

    In some cases where firms use third parties for software/clearing, the firm traders’ order flow information is being used for the profit of others.

    Just another reminder to exhaust all possible questions before joining up with a firm.
     
    Occam likes this.