Re:Mom and pop investors are on a stock buying spree, fueled...
by egdod on Sunday February 23, 2020 @03:00PM
(#22399154)
Payment for order flow doesn’t mean you’re losing good order execution.
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Re:Mom and pop investors are on a stock buying spree, fueled...
by yellow_lead on Sunday February 23, 2020 @04:01PM
(#22399489)
Maybe, but do you think a brokerage that has paid for order flow will execute those orders in the investor's best interest?
I'll be honest that I don't have the full picture, but happy to learn something new if it's a different story.
Re:Mom and pop investors are on a stock buying spree, fueled...
by throwaway9d0291 on Monday February 24, 2020 @03:24AM
(#22402507)
They're required by law to give you execution at the market price or better, see https://www.sec.gov/fast-answers/answersbestexhtm.html
Because of this, it's legally forbidden for them to mess with your prices in such a way that you lose anything.
I think people see that these firms make money from selling order flow and as a result assume that they must be losing money somehow. That isn't the case. Some firms (e.g. HFT) are simply willing to pay a little extra for the counterparty to their trade to be a dumb joe instead of another HFT firm. This can lead to both you and the broker winning.
Re:Mom and pop investors are on a stock buying spree, fueled...
by yellow_lead on Monday February 24, 2020 @05:20PM
(#22409048)
That makes some more sense. I would like to get a better picture of how trading works in terms of exchanges, fees, and agreements though. I'll have to research this.