Difficulty to be the best bid or best offer

Discussion in 'Trading' started by Option Trader, Feb 19, 2008.

  1. Sometimes I find it difficult to become the best bid or best offer because it seems the algorithm of some market maker?? comes to beat me out by one penny. Does this happen only with certain brokers? Or it has nothing to do with your broker?
  2. It's the advent of remote market-making. Not to say your broker doesn't also run RMM, they most certainly do. IB comes to mind.
  3. Would this occur by Thinkorswim? By Genesis Securities?
  4. Algos love to penny you.

    Plenty of ways to trick them.

    Plenty of ways to get them to penny you when pennying you isn't advantageous.

    Figure out one MM algo in one stock, you can't figure them out entirely since they have discretionary components which are based on variables unknowable to you(insider orderflow knoeldge, etc.) but at the very least, figuring out the algo will help you get the good fills you want if youre tradiing illiquid issues.
  5. Do the algos go based on the stock? Or based on the broker you're using? I.e. do two customers with 2 different brokers go thru the same "algo" experience?
  7. yes it is by stock. it isn't a broker thing. it is a penny program.
  8. Current Bid/Ask is also ordered by size from largest to smallest regardless of who put in the order first. Unless you're some wealthy individual investor, MMs and institutional players will always cut in line ahead of you.
  9. best to just join them at their price rather than attempt to cut in fromt of them. everytime you go a penny higher,they are programmed to up a penny above you. joining them at the same price as their bid helps alot.
  10. If one's broker is a MM, like IB, does one sometimes get "cut ahead of" before they submit your order, even if my order is bigger?
    #10     Feb 20, 2008