It may or may not be trueâ¦.. but whether it is..., or isn't â is not germane Once you enter, what does price do after that / how much volume is involved (not referencing your 100 shares btw) Thatâll tell ya everything necessary â but not necessarily what youâre asking As for your friendâs perspective â doom and gloom â potentially, if you donât use a stopâ¦.. slippage â very⦠very doubtful As to your perspective â I suggest you reevaluate it â respectfully of course eta - whether you're buying another's entry or exit - is not nearly as important... as who is in charge..., or about to be - when you're going long... or short Food for thought RN
This is how it all began: If a dealer is shorting a stock to fill an order, he's hedging his short in options. He is not net short, or he wouldn't be a dealer for long. Life is better for a dealer if he can cross the order, but, being gravy, it is not the main course. They'll buy it if they can - "payment for order flow" is about one thing: buying crosses. A scam OTC stock is of course a different story, but I did say "dealer". Google market-maker, specialist, liquidity provider. Nowadays, if your order is being filled by some other schmoe on an ECN, you have no idea whether he's hedging or if he's got a printing press in his bedroom. If you google up "Naked shorting" and "Fails to deliver" and then connect some dots, you might conclude that the "printing press" model was used in 2008 not by mere schmoes, but by schmoes in very key places of the industry to bring down Bear Stears, Lehman Brother, AIG, (and countless relatively unknown issues) and would have taken down more had not the temporary ban been put into effect. This was made possible by lax enforcement in an environment of outright fraud on the most massive scale. If you are interested enough to scratch the surface, You'll come across the Overstock.com story. Ignore all the hype and read some of the articles about naked shorting. There's an author who has done his homework and what he has to say will be incredible -- but he has credibility. The specialist system was the best thing going, but the second generation was stupid and greedy so God punished them with things like Arca. And so we all suffer.
this is why schwab and td want your business - it's order flow they not only don't have to pay for, you pay them to take it.
This is an important distinction to make. Options and stocks are not the same â options are basically an independent âbetâ between two parties on the price of a stock. Stocks however donât need someone to be short when a sale happens because it can just be transferring ownership of shares.