Author Topic: Payment for order flow - backdoor kickbacks  (Read 2043 times)

Spekulatius

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Re: Payment for order flow - backdoor kickbacks
« Reply #10 on: December 06, 2019, 03:52:31 PM »
Thanks for the post Longhaul.  I can't agree more that the decline of meaningful limit orders is to the detriment of us all.  Of course, when I place a limit order for 500 shares on a 23 bid, only to see it filled by a HFT at 23.0001, it just makes me pull my offer and use more judicous market orders instead.  Until 5 years ago, I never used market orders but now they are the only way to get a fill between the bid/ask as placing a limit order between the spread just moves the HFT's bid/ask for most of the stocks I like (If only I stuck with FANG stocks, high frequency trading would be my friend).   On the plus side, the trend to zero commission rates, lets me break my trades into smaller pieces, and best of all free commissions means someone can't screw me over by selling me a single share on a limit trade and sticking me with the commission charge and try to nudge me off the NBBO.

Of course, there is no "free" in free commissions, now I have to spend my time moving available cash around to avoid leaving cash in crappy sweep vehicles (I'm looking at you TDA!).  Fidelity seems to treat me best there, but they don't let me buy low priced stocks even if the low priced stock has a share price over $1000, but that's another rant. I'm starting to getting worked up so time for me to take a chill pill...

Just break your order in small little limit orders at slightly price points. Thatís what I am doing, especially now with zero commission trades. FWIW, I donít think Fidelity gets paid for order flows and In did an analysis for myself that the commission savings far outweighs the rebates I am getting (price improvement). Thatís for small order of maybe 50-300 shares or so, which I how I like to go about this now. if you do orders > 1000 shares, then the rebates become more noticeable.
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muscleman

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Re: Payment for order flow - backdoor kickbacks
« Reply #11 on: December 06, 2019, 03:54:42 PM »
Fidelity seems to be the only broker that does not get paid on order flow AND also charges zero commissions AND gives a very good interest rate on cash if you select their government obligations sweep fund. How does it make money then? ::)
I am muslceman. I have more muscle than brain!

Spekulatius

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Re: Payment for order flow - backdoor kickbacks
« Reply #12 on: December 06, 2019, 03:57:22 PM »
Fidelity seems to be the only broker that does not get paid on order flow AND also charges zero commissions AND gives a very good interest rate on cash if you select their government obligations sweep fund. How does it make money then? ::)

Advisor fees, if you pick their advisory services. Itís hard not to recommend Fidelity and if you donít want to dive into foreign stock markets, I would argue itís better than Interactive Brokers.
Life is too short for cheap beer and wine.