ECN Fees at Prop Firms

Are ECN fees generally also paid by the trader or by the prop firm? Are they typically included in the per share price to the trader?

 

Generally just pass through net between taking and providing.

Don

 

If you learn how to add/take liquidity you can cut your commissions by half or more.

 

Easier said than done with all the liquidity algo's swarming.

If you trade big volume and you're getting filled on the bid/offer then odds are you're on the wrong side of the move (for the short term anyway).

 

What if you enter a market order, is this adding or taking away liquidity or neither?

 

Taking. Adding liquidity is done via a non-marketable limit order.

 

yep. this is where order execution comes in. It is half the battle at the end of the month when you calculate edge per share.


- Know the ECN's inside and out (price to provide vs rip) each ECN is different from price, liquidity available and other parameters.
-make sure your clearing firm has them enabled for you to actually use
-don't forget about dark pools of liquidity/midpoint orders

 

What kind of a deal should I be looking for in terms of ECN charges and rebates from a prop firm?

Interactive Brokers has these charges listed on their site:

NASDAQ >= $1.00 per share
$0.0023 ($0.0022)

NASDAQ < $1.00 per share
Trade Value * 0.003
Trade Value * (0.0025)

NYSE >= $1.00 per share

$0.0023 ($0.0022)

NYSE < $1.00 per share
Trade Value * 0.003
Trade Value * (0.0025)

AMEX >= $1.00 per share
$0.0023
($0.0022)

AMEX < $1.00 per share
Trade Value * 0.003
Trade Value * (0.0025)

This could really make a big different given the fact that my volume is really going up.

 

What do you mean "what kind of deal should I be looking for"? Prop firms will pass on those costs or credits to you, they are charged by the ECNs themselves and not subject to negotiations with the prop firm.

 

absolutely correct. and if your rates/volume/strategy are in sync, you can actually net out a positive p&l on rebates than you pay on commish. (including exchange/sec/nasd fees etc.)

who says you can't trade for free. lol