Why do I get the feeling that Eagleboy is simply regurgitating any information he gleamed from "Stock Trading for Dummies" back on this forum? If you need a soapbox, perhaps you can start a local investment club and lecture the orphans and widows on your newfound investment acumen.
On a cheap system, your not being shown all of prices out there on the open market. Therefore, you set your orders accordingly. You might pay more for a stock then what you have to because you are adjusting your limit/stops/etc based upon the information you are receiving. When there is a quote on IB, you are most likely seeing the most accurate information out there. I dont know about Ameritrade however. Ameritrade, sharebuilder.com, etc. maybe good for a trader who trades over a longer term and is not interested in getting the best price on the market. However, if your actively placing trades all the time, then it does add up. Let me make this easier for you to understand. Bring up the Level II screen on IB and cross out all the ECNS and just use a select few market makers. Notice how the price difference can sometimes be pennies, but it also can be nickles/dimes or even more. Some people trade without the benefit of Level II quotes and so they just see what is displayed on the screen which they believe are the best prices when in reality they might be just from market makers that have a contract with the brokerage. So of course the limit order will execute at the price you set, but only through the price that is dictated by the market maker which might be different then whats on an ECN like the Island. Your limit order may never even execute and then you wonder why. You looked at the time/sales and there were orders that executed at that price level. However, the brokerage didnt route your order through the best possible routes. This is why the guy says in the commerical "I hate when a trade is done and you paid more then the quote price".
Nope buddy. This has been common knowledge since the 90s. Did you trade in the 90s? Ive had my IB account from when they first came out. I was impressed then because they let you choose the place to route your order. If you guys dont know about how the online brokerages operate, then Im wondering exactly how old some of you are. Maybe you should go ahead and read Stock Trading for Dummies so you can learn about order routing. Thats why I say to read that book first instead of the Market Wizards books. You have to learn how to walk before you can swim. I bet I could sit here all day quizzing you on different things from securities laws to history of the exchanges, etc. I would probably get a blank look and then you would make some rude comments. Eventually, you'll just lose all your cash anyway when the market flexes down again. Oh well. There goes another one. I just saw a man on CNBC who was a steward who got rich off if the stock purchase plan of Southwest. Millions. Maybe he should be the one lecturing you. . .
Totally true. But I think the point of the ad was that you won't get a fill that is worse than the NBBO. This happened to me two weeks ago. I was closing out a long term long position at one of those brokers that only offer a web interface. Due to timing issues, when I clicked on "place order", my limit price was now 2 cents below the best bid. I watched as my order was filled at my limit, 2 cents below the best bid. I called them and the service rep thought it was completely logical that I got a fill at my limit price. It was clearly not worth my time to complain about a few dollars, but I was annoyed that they'd fill me outside the spread. I understand that you can get filled at a price worse than the NBBO when trading options, but it's never supposed to happen with stocks.
"Ameritrade, sharebuilder.com, etc. maybe good for a trader who trades over a longer term and is not interested in getting the best price on the market. " i would qualify the last part of the sentence to read "best price on the market at that moment" daytrading with AMTD would be retarded, to put it simply. just the fact that it is not a direct access broker is reason alone, apart from the payment for order flow. you are correct, in that AMTD is good for longer term stuff. i have AMTD and IB accounts (more than one of each). AMTD is great, with the $3 per trade unlimited shares, when I want to set a limit order to buy or add to a position or close it out. as long as my timeframe isn't NOW, it's fine. i can wait (and have) weeks or even months) for a limit order to fill. that's fine when you are in the for the longterm and building positions in good stocks, which is generally how i play buy and holds. i wanna buy weakness and sell strength (generally) and can wait. time is on my side. it also works pretty well for swings, although obviously swings are a bit more time sensitive. daytrading with AMTD would be insane. now, the vast majority of my daytrades are futures, which AMTD doesn't offer, but even for stocks, it would simply be nuts not to use a direct access broker and (essentially) getting instant fills at the best price. of course, anybody who doesn't have multiple accounts ANYWAY is crazy, but that's another story.
You are an obvious wannabe. The mere fact that you start threads trying to "educate" people on the basics of the industry says it all.