Sounds like an excellent enhancement, Steve. Congrats on its implementation and good luck with its (and your) success.
If all customers at MB Trading place limit orders only, is MB Trading prepared to lose money on this? How is MB Trading making money? I'm skeptical of this enhancement due to this aspect (i.e. MB Trading willing to lose money).
Dewton... In order for a limit order to be paid it must add liquidity. You can only have on side of a trade that added liquidity and the other side must have removed/taken liquidity. It is not possible to lose money in that we charge 2.95 for taking and pay 1.95 for adding. Please take a glance at this link when you have a moment as it will explain all the details and give examples and such.... http://www.mbtrading.com/pricing.aspx Regards, Steve
I think you are confused on justwhat "adding liquidity" is- when you place a limit order on either side of the trade, you are providing liquidity to the market. (talk to your equity guys because if you are saying you only get 1 credit if you provide a limit order to enter and exit, then you need new terminology for this type of transaction. This is why it is confusing.)
bpc... I know exactly what adding liquidity is. The question was asked that if two limit orders enterred then MBT would lose money. I was pointing out that in such a scenario that it would be impossible to have both those crossing orders, which make the trade, both be adding liquidity. Only one would be adding liquidity and the other would be taking. In such a case there would be a limit order and a marketable limit order. The limit order would be the one that added liquidity and would receive the rebate while the marketable limit order would be taking liquidity and pay the fee for taking. Not to be confused with two limit (adding liq.) orders. In that case both would be getting the rebate but they certainly wouldnt be crossing each other. Regards, Steve
I don't trade spot FX, but I really like this idea, so my hat goes off to you guys, I hope it takes off. Maybe someday rebate trading will be a viable technique in forex, but I guess that will depend on how tight the spreads are on your 'ECN' and you'll also need lots of price takers to make collecting the rebate meaningful (getting $1.95 doesn't mean much if you're already down 4 pips by the time you get filled).
That is a pretty good deal for retail forex Steve! Good luck on it, I hope it brings you a ton of business and tightens your spreads.
It does not make any difference to the trader as you pass the flow to a market maker, like GAIN for example, and you get paid for this. I am talking from the trader's view point. If a trader is willing to reveal his future positions he may get a rebate at the expense of the market maker knowing what he intends of doing. If many traders decide to take the rebate at price X, they are a sitting duck for the market makers at X. This is so simple. I prefer to never get a rebate and enter market orders. Don't get me wrong, I like your firm. But celebrating over rebates is for uninformed traders, IMO. Good luck with your new program.