As far as I'm concerned, the whole point of using invisible ISLD orders is to get to the top of the order queue without anyone else 'pennying' ahead of you...at least, that's how I use them. What invariably happens is, let's say I want to buy, and I don't want to pay the ask because the market is too thin...I put a bid ahead of ARCA with an invisile ISLD order...and the trade goes to the ARCA guy, who is bidding less than me! This happens to me pretty much EVERY single time I do this. This brings up some interesting questions
First, don't other traders have intelligent routing systems, that will trade against my ISLD bid? Do they automatically route to ARCA, and assume that what's showing is the whole picture? Even so, what if another bid were to come in before their trade goes through (that's not ARCA), but higher than the ARCA order?
Second, do hidden ISLD orders somehow lose precedence, even if they offer price improvement?
Third, what are the other alternatives? I've tried discretionary orders, but IB always routes these to ISLD as well, so I'm still stuck. Maybe time to switch to another broker that uses discretionary ARCA orders...
How does a broker's routing software know you are there if your order is hidden? Stepping ahead with a hidden order is only effective if you're stepping ahead of another ISLD order. You are hoping an order will be routed to an order already on ISLD that can be seen.
Precendence within the queue at a given price is unchanged with a hidden order in my experience.