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. d08


    Not every week but I definitely suck.

    I'm not confident if this is the thread for random topics though.
    #11     Mar 2, 2018
  2. Metamega


    Google “ HFT” “ Price Improvement” “Sub Penny Increments”.

    Basically your broker is required to get you the NBBO. Most brokers if their direct access will have an option to submit to a specific exchange or “smart routing” which will include dark pools and other ATS’s.

    So market making firm is on stock ABC. Their posted orders in the book are at 9.90 bid and 10.10 offer.

    You submit a market or marketable limit order to buy for 10.10. Your broker sends this to a dark pool affiliate of theirs that gives excellent rebates. They have an order for 10.00. that gets you a better price then the NBBO.

    They just sold at 10.00 but they have a buy and sell order at 9.90 and 10.10. So they can lean on their orders and cut their exposure on the bid/ask spread.

    It’s all legal with the SEC for marketable limit orders and limit orders. If you submit a limit order for say 9.80 buy in that example with smart routing, it would find that no one is interested in the order and then get sent to the exchange and sit on the order book.

    I’d recommend two podcast from chatwithtraders. One with Heim Bodak I think his name is and Eric Hundsader.
    #12     Mar 3, 2018
  3. ET180


    That's what I thought. I thought that the auction process had to be involved in determining a fair price for both parties. If the broker can match the NBBO through dark pool or whatever provider, then there's no conflict of interest.
    #13     Mar 3, 2018
  4. %%
    Good points ET180.
    Cabin111,ever seen any markets ; 3 for $1?? Sure you have. But if you buy only one ---you pay the dealer- seller $00.34 NOT $ 00 .333. That's just the way markets work. You should also consider the US Treasury floated a trial balloon of doing away with pennies LOL . :D:cool:Too many for pennies/ many for pennies+ land of Lincoln......
    #14     Mar 5, 2018