Explain to me why I can only trade in 1 cent increments...Schwab and Fidelity

Discussion in 'Stocks' started by Cabin111, Mar 2, 2018.

  1. Cabin111


    I see the stock ticket go by...Yahoo! Finance. It may even get into .001 per share...But I can't trade there. Is that fair for the market? I am seeing people jump in front of my orders all the time!! Yes, I know about HFT. And "NO" I am not doing an "all or none" position. If I went on to Schwab or Fidelity's advanced platforms, could I trade in 100th of cents?? Are there other discount brokers who allow this?? I really don't want to move...Well established and the exit fees would kill me. I even own stock in Schwab. Schwab will give me price improvement many times. Just frustrating...Thoughts?
    kmiklas likes this.
  2. No.
  3. ET180


    There's not just 1 exchange so if you see someone jump in front of your order, then it likely executed on a different exchange. That's an issue with your broker's routing algorithm. Aside from penny stocks, I don't see why anyone would want to trade in fractions of a cent. The exchanges don't do that. If you see fractions of a cent in your execution price it's because your order was executed against multiple trades at different prices.
    murray t turtle likes this.
  4. "The vast majority of retail orders get sub-penny pricing through what is called internalization. Internalization is when a place like ETrade will fill one customer sell order with another customer buy order. For instance, one customer wants to sell Citigroup at $48.56. They have another customer that wants to buy Citi at $48.57. So, instead of sending those trades to the exchange, ETrade buys Citi from the customer that wants to sell at, say, $48.562. This is what is called priced improvement. because the seller got more than he was willing to sell for. ETrade than sells Citi to the customer who wants to buy at $48.568. Price improvement again, because the buyer pays less than he was willing to pay. Big banks operate a very similar process, rather than sending orders to the exchanges, and that’s one of the reasons exchanges have been losing market share."

    Antartica, aldrums and Cabin111 like this.
  5. d08


    You don't even get 1 cent increments in most securities thanks to FINRA but rather 5 cents.
    MoreLeverage likes this.
  6. ET180


    Is that right? If a customer wants to sell at $10 and another customer wants to buy at $10, the order never goes to market? In that case, isn't one customer getting a less than optimal price execution? At best, either the bid or the ask will be at $10, but never both. So in the best circumstance, one customer gets a fair price and the other gets less than they could have got had the order gone to market. Taking the example further, what if the broker takes the other side of the trade. Say they fill the customer's sell order at $10, then turn around and sell on an exchange at $10.03, essentially front-running the customer and keeping the delta. I'd be surprised if there's not some regulation against doing that. Otherwise, it would be in the broker's best interest to screw the customer.
  7. Cabin111


    Both Morgan Stanley (years ago) and Schwab (maybe even Fidelity) have declared they were the market maker in the trade. As long as they disclose it, I think they're fine...
  8. truetype


    Say what? Relatively few stocks trade in 5¢ ticks, and the important stocks (large/mid caps) trade 1¢.
    murray t turtle likes this.
  9. d08


    Over 1000 trade in .05 (previously I suggested over 2100 but that included the control group).

    Many are liquid ones like AMC, OSTK, HA etc. Smaller caps, yes but I'd call those "important stocks", whatever that means.
  10. Are you still losing $12K a week, d08 -- you use to post in the weekly P/L thread, o_O

    If you alter, or tweak, your game a bit...you could afford a used 2014 Porsche 911 Turbo S...given the number ranges you're throwing around,

    2018, all the best, -- ET in full effect,
    Sweet and Sour beef/pork/chicken/fish.
    Last edited: Mar 2, 2018
    #10     Mar 2, 2018