Ticket Deal vs Per share pricing

Discussion in 'Trading' started by kean, Feb 14, 2008.

  1. kean


    Can someone define the parameters for a ticket deal. Pay per share is simply each execution. Is a ticket deal per order or orders over time or something else? Is a ticket considered uniform amongst brokers.

    Thanks in advance.
  2. kean


  3. kean


    must be someone?
  4. EricP


    On a commission 'per ticket' deal, you are charged a fixed commission rate based upon each executed order, regardless of the size of the order executed. Depending on the deal, the broker may or may not pass along the cost of additional fees, such as SEC and ECN fees incurred on the executed order.

    On a cents per share commission model, you are charged a commission rate based upon the number of shares that are executed (not the number of <b>orders</b> executed). Depending on the deal, the broker may or may not pass along the cost of additional fees, such as SEC and ECN fees incurred on the execution of your order.

    Some examples:

    Your order to buy 4000 shares of stock IBM is filled.

    => On a per ticket commission schedule, this is a single ticket and is charged the single ticket commission rate (anywhere between $1 for a cheap rate for a high volume trader, up to ~$14+ for a client of E*Trade, AmeriTrade, etc). Note that some firms change an additional amount for shares executed over 5000 on a single ticket.

    => On a cents per share commission schedule (assuming 0.4 cps rate), you would be charged 0.4 cents per share times 4000 shares, or a total of $16.00 for that trade.

    Note that the broker may or may not pass along extra fees, in addition to these commissions charged.

    Assuming other factors (i.e. execution speed and quality, reliability, etc) are equal, the per ticket deal can often be better for traders that tend to execute large sized orders => i.e. average execution size of thousands of shares per execution. The cents per share commission model is usually best for traders that execute orders of smaller size, such as 100-1000 shares per typical execution.

    Hmmm, rereading your question again. The "parameters" of a per ticket deal? Not exactly sure what you are looking for, but I'll answer it like this. A ticket is counted as any order that you place in which you get at least one share executed on that ticket. Typically, this means that if you place a 1000 share order, get filled for 100 shares, and then cancel the remaining 900 shares, then you are charged the per ticket fee. If your order is for 5000 shares, and you are executed for 600 shares, then 2000 more, then another 1500 and finally the remaining 900 shares, then you are charged for a single ticket for the entire 5000 share transaction. If you place an order for 800 shares, and then cancel the order with no shares filled on the order, then you are not charged anything.
  5. Different brokers define "per trade" differently. Some define it as a single ticket that is executed that day. Others give you a time limit, say 2 minutes, within which it has to be executed. If you cancel or mod the order, usually that means another ticket. As the previous poster said, there can be differences in additional fees for ECNs etc. You really have to read the fine print with some brokers because the big ones, like Schwab, ETrade, etc, often don't spell it out very clearly. Generally the brokers who cater todaytraders are much more forthright.

    Generally, most daytraders prefer per share pricing. If your style is to post a limit and wait to be hit, ie adding liquidity, you are generally better off with a per share deal that gives you ECN rebates for adding liquidity. The reason is you will often be moving your limit as the market moves. That will cost you each time if you are "per trade." If your style is to take the offer with large size, then a per trade deal with no additional ECN fees may be ideal for you.

    The numbers can seem quite trivial when you compare deals, but over a years worth of trading they can become extremely significant.