Re:Are random trading strategies more successful than techni...
by hbrav on Wednesday September 29, 2021 @03:31PM
(#28698702)
Yeh. It would be more accurate to say something like this:
A retail trader will usually be trading with some sort of market maker. That market maker will also trade with informed traders, and sets their bid-offer spread accordingly to offset this adverse selection. So the retail trader is paying a bid-offer spread that is the result of other informed traders in the market.
Of course, as a retail investor you may have access to a broker (e.g. Robinhood) that tries to exclude informed traders so it can set a lower spread.
A retail trader will usually be trading with some sort of market maker. That market maker will also trade with informed traders, and sets their bid-offer spread accordingly to offset this adverse selection. So the retail trader is paying a bid-offer spread that is the result of other informed traders in the market.
Of course, as a retail investor you may have access to a broker (e.g. Robinhood) that tries to exclude informed traders so it can set a lower spread.