Brokers Trading Against the Retail Trader

[rsagi 10]

Hi All,

 

I am interested in knowing what you think about the claims that a broker with a trading desk may be trading against the retail trader - us...

 

Am I avoiding this issue when I use market orders so they cant "find" my stop loss/limit?

 

I currently use Fidelity ATP - how is the platform for daytrading + scalping stocks vs. IB/TS/Mbtrading/MT/Ninja etc? I havent seen any input on the forum here regarding platforms suck as LIGHTSPEED + HYDRA? How do platforms such as REDI compare?

 

I know a guy who scalps using ATP buying 5,000- 8,000 ETF shares and enjoys the platform - any thoughts? (I know he also has an account with IB.) I found it to be really interesting that when he was asked if he uses "smart routing" - he said NO - he found no slippage issues or added value in doing so- again What Are Your Thoughts on This ONE???

 

Also, what about short inventory when it comes to big companies such as Fidelity vs. others? - I only DayTrade ETF's and stocks above $10 - no OTC etc.

 

My apologies that this is a bit of a long post ...

 

Looking forward to your response,

 

Steve

[james_gsx 16]

I don't see why you would use a platform such as Fidelity ATP if you're day trading and especially scalping. I had Fidelity and I thought their charts were lacking to say the least. And if you're using market orders it's not a matter of being "found" or not, you're setting yourself up for bad fills. If you use limit orders you might miss a few, but those few ticks can add up over the course of say a year.

 

Someone like Brownsfan would probably be able to answer your question about your broker trading against you. I've heard examples of brokers taking the opposite side of your trade in anticipation that you screw up, and eventually blow up. But I'm not sure if that's myth or real.

[rsagi 10]

I totally agree about their Charts. I also think that the execution screens - the lack of keyboard based quick execution is just aweful.

 

You criticized the charts - but more importantly, what are your thoughts about the fills by fidelity vs. others?

 

Best,

Steve

[james_gsx 16]

To be honest, I've never really had a problem. When I traded equities I typically took a long term approach (several weeks) so I wasn't so worried about where I was filled. Now I only use Fidelity for options, and I always enter limit orders. The one time I did use a market order, however, I got a shitty price and I deserved it.

 

But I'm not sure if ATP has an order book style execution platform available, that way you can work your bid like you could on say an ES trade.

[rsagi 10]

I c

 

Two more questions.

 

1. Since you do options- do you know a FREE or cost based options "scanner" where I can search for options with the highest premium for covered call purposes? Any interesting tools out there for options volatility/implied volatility etc? I couldn't find one on Fidelity.

 

 

 

2. Who is the broker with the largest/MAX LEVERAGE Intra day for stocks?

 

Best,

Steve

[trade-samarai 10]

The book "Day Trader's Survival Guide," written by Christopher A. Farrell talks about this in some detail.

[Davidee 10]

Hi All,

 

I am interested in knowing what you think about the claims that a broker with a trading desk may be trading against the retail trader - us...

 

Am I avoiding this issue when I use market orders so they cant "find" my stop loss/limit?

 

I currently use Fidelity ATP - how is the platform for daytrading + scalping stocks vs. IB/TS/Mbtrading/MT/Ninja etc? I havent seen any input on the forum here regarding platforms suck as LIGHTSPEED + HYDRA? How do platforms such as REDI compare?

 

I know a guy who scalps using ATP buying 5,000- 8,000 ETF shares and enjoys the platform - any thoughts? (I know he also has an account with IB.) I found it to be really interesting that when he was asked if he uses "smart routing" - he said NO - he found no slippage issues or added value in doing so- again What Are Your Thoughts on This ONE???

 

Also, what about short inventory when it comes to big companies such as Fidelity vs. others? - I only DayTrade ETF's and stocks above $10 - no OTC etc.

 

My apologies that this is a bit of a long post ...

 

Looking forward to your response,

 

Steve

 

Here's an article on brokers trading against you if you are interested.

 

In short, it says the following. Brokers tend to fall into one of the three categories, Market Makers, STP brokers and ECN's.

 

An STP broker passes all it's clients trades directly to liquidity provider and has nothing to gain from it's clients losing and never trades against them. If anything, an STP broker would want to see it's clients succeed and make money so that they keep on trading.

 

ECN brokers simple provide a true market place where all their clients, retail traders, banks, financial institutions can trade against each other on an equal basis - ECN brokers don't care which of their clients wins and which of their clients lose as they're clients are effectively trading against each other.

 

Market Makers (brokers with a dealing desk). These brokers initially take the otherside of their clients trades and in doing so literally make a market and provide liquidity. They could, if they wanted to, hold on to the otherside of their clients trades and profit from their clients losses if they wanted to but they probably don't. Most market makers probably just seek to match their clients trades with the trades of other clients who want to do the opposite and hedge the difference (what they can't match) in the market and seek to profit from the spread.

 

Hope that helps.

[henryduncan12 10]

I don't think that all brokers trade against the retail traders. Some fraud brokers may be go on this path but not all.

[4EverMaAT 10]

Normally these tricks only happen in market-maker type of situations [forex--although it is rare to see this now as there are lots of tools to readily determine trad. Regulated environments traded on an exchange I didn't know that could happen. Aren't these ETF/Stocks traded on or through an exchange or are these off-exchange transactions?