Does Schwab Limit Price Improvement for Very Heavy Trading?

Discussion in 'Order Execution' started by Speedtrader1, Feb 9, 2021.

  1. So I have been trading at Schwab using market orders only in quantities of 1,000 to 2,500 shares usually trading AAL and HAL. I had been getting exceedingly good execution consistently since July, then at the beginning of Feb in my taxable account and today in my Roth it's like I got put in "price improvement jail?" I trade a lot, approximate 500-600 round trips per day. I usually only go for a penny, sometimes two. Trading 20-45k I've been averaging $1,700 to $2,000 plus per day. I do it by evaluating the level two screens, taking into consideration market maker/institutional head fakes. I have quite a bit of trading experience and like to keep things simple. My strategy depends on price improvement because if I'm wrong I get out and take very little to no loss. But when I only buy at the ask and sell at the bid this strategy doesn't work. They're still letting me trade and I've received no notifications from them I've done anything wrong. I'm assuming this is Schwab and not the market maker? I'm also hoping this is temporary in that this is an effort by them to ensure more even distribution of price improvement going to other investors? Any info other experiences you've had would be appreciated. thx!
    murray t turtle likes this.
  2. S2007S


    $500,000 in profits a year. Free money indeeeeeeeed
  3. noddyboy


    Don't be jealous.
  4. The spread on those two tickers is .01; what kind of price improvement were you getting? subpenny?

    This is only a guess, but there might be a way for the MM to tag your account for toxic flow. If that's the case, I could see it leading to your orders being handled differently and/or sent off to inverse fee exchanges.
    TrailerParkTed likes this.
  5. Thanks, that's what I was thinking. Yes, splitting the penny and evaluating in real time the price at every single penny for 5 hours a day. Basically picking up $20 bills all day long. It's a lot of work and very fast paced! :)
  6. I remember back in the SOES days MM's hated us and ended up putting and end to the game. Maybe with commission free trading they are waking up to the fact that you might be costing them money and they are putting and end to your game. :)
  7. %%
    Sounds like that is not enough time to mean anything, in your Roth.

    I just checked out SCHW pay for order flow;
    looks like its a big difference in SPY stocks + non spy stocks. Good job making anything @ all on market order both ways/if thats what you are doing. I almost never use market entry, except sometimes @ certain numbers.
    I never worry about the fact in the case of SCHW, their mm or specialists pay much more in order flow for market orders+ i seldom use a limit order for exits.
    Volume on both stocks was waaaaay down today, hard to believe you would use a market order both ways for daytrade penny profit nq stock;HAL had plenty of good moves today, even though to maNy sec fees could mess me up /LOL..........................................................................................
  8. The idea that you can get different fills based on who you are (your past trading activity) is pretty gross. PFOF should be illegal imo.
    murray t turtle likes this.
  9. %%
    1 ] THAT seems so unfair @ first glance.:caution::caution::caution::caution::caution:,:caution::caution::caution:
    2] But when i ran my home/business improvement,the better customers got more of my time + better place in line. Capital markets can be gross but better than anything else.
    As long as PFOF is disclosed/fine. I usually use a market order on exit + thats fine if the mm pays more for that kind of order., because they average more.
    I used a limit order on a semi liquid tech etf today+ a market exit on another:D:D:D
  10. So the world's biggest market should operate on the same principles as a mom and pop home improvement store? I don't think so. Discrimination should be illegal.

    PFOF is bad for other reasons too, for one thing it is naturally leading towards a monopoly in liquidity provision. Think about how high the barriers to entry are to the PFOF game. It's literally impossible to compete.
    #10     Feb 11, 2021
    murray t turtle likes this.