i've been a rebate trader for the last few months. I'm trying to fnd out about new strategies on rebate trading. So far my basic strategy is mostly to get out as fast as I can everytime [never wait for gross profits unless there's no option] and never take more than 2cents on a single loss. What other strategies are do you guys employ for making money on rebate stocks?
at the risk of sounding, well, curious... how do you do rebate trading? presume .0015 commission presume BRUT is comm free presume MyTrack pays .00027 per share
well, the way rebates work is that ecn's pay a commision per share for adding liquidity and fees [likeclearing, se fees, etc] are fixed per operation. So you basically have fixed costs vs exponential incomes. For example, Island pays you $0.2 per 100 shares, lets asume that all expenses added are $0.45 per trade. So if you added 300 shares throgh Island you get $0.6 income and you spend $0.45 in expenses, so you get a net profit of $0.15. Not bery good. Lets say you added 3000 shares. With the same fees you'll get a profit of $5.55... You have to multiply that x2 since you need an exit too... so the round profit for the operation would be $11.1, asuming that you managed to enter and exit at the exact same price. Do it 100 times per day and you've got yourself a bussiness.
Attain ECN gives 0.003 per share for adding liquidity, the highest payout to my knowledge..is anyone using this ECN for rebate trading? Does the fact that it is an ECN with low volume compared to ISLD and ARCA affect this type of trading? Also does anyone know any good brokers that provide Attain as a routing option?
Of ourse we use attain ecn. The problem is that they also charge the highest comission for removing liquidity, around 0.5 so it's usually the last one to get hit... that is unless there's noone adding liquidity at attain, then you can use it to cross the market, and it gets it quite fast. That makes it a great way to get in fast, or out fast, while getting paid big time.
I think is mostly prop firms that let you get rebates properlly. RML Swift Mytrack Mastertrader just to name a few.
Adding liquidity means joining the bid or the ask as opposed to taking it away. Then when you get filled the ECN gives you credit. Example: Size on the bid is currently 200 on ISB....I want to get my credits for adding liquidity so I bid 1000 shares on ISB. The size on ISB is now 210 on the bid and I am at the back of the line. Make sense?
I thought this "gimmick" ( rebates ) was going to stop due to some reg. action this yr? or do certain prop shops and ecn's still promote this and do some people just make money doing this on stocks under $5 or under $2 , etc without ever learning how to trade ?