Posted on 05/18/2014 10:54:44 AM PDT by Kaslin
They pay for it by doing illegal microtrading, whereby they know you want a stock at a slightly higher price so they trade buy and sell it in a millisecond.
1. Stock is $1.00
2. You put in a trade for $1.02
3. They intercept your trade (illegally wiretapping your trade) and buy the stock for $1.01
4. They then sell you that stock to you at your requested $1.02
5. They made $0.01 cents on the transaction
“They pay for it by doing illegal microtrading, whereby they know you want a stock at a slightly higher price so they trade buy and sell it in a millisecond.”
Oh, my goodness. This is why I’m perfectly happy to pay market for a service I want. I’ve been called any number of times and told, “You’ve just won (100 gallons of gas, free dance lessons, a new car.)” and I always say, “I’m sorry I don’t want anything that’s free. I’m happy to pay. Goodbye.”
Yep, they want to front run your trade. They’ve been doing it anyway for a while, at least now you won’t be paying the $7.99 for the pleasure.
What I want is the ability to trade more often then buy then wait 3 days to settle then trade then wait 3 days to settle. I do not have the large amount of cash to keep in an account for day trading.
“has to do with high frequency trading” You hit the nail on the head... you will be buying in 15 - 30 second grouping from a company that is trading ahead of your aggregated purchases.
So they’re skimming. Figures.
I am satisfied with the $7 to $10 commissions at Etrade and Ameritrade, for that price I get a nice web page to follow my stocks and the trades are reasonably fast. I do most of my research on my own. I am a buy and hold dividend stock buyer and don’t make over 20 trades a year. The bulk of my retirement money is not in my portfolio as that is in IRAs and deferred income accounts which have a menu of mutual funds to chose from.
The trade will probably wind up costing you a lot more than $7-$10 if you’re purchasing a large number of stocks, which is the plan.
There is no free lunch.
I don’t understand what you’re thinking. The commission isn’t the major expense; why should eliminating it widen the bid-ask spread or total trading cost to any significant degree?
You said “When you buy/sell stock, the transaction money is made on the bid-ask spread. At, say, 2 cents a share, a 1000 share order will be $20, which is more than the commission they say they charge.”
I said a lot of stocks trade with a higher spread than 2 cents right now. I’ve watched some that a 50 cent spread is not uncommon.
If you cannot identify the mark/sucker, it’s because you are the mark/sucker
Why do people in receipt of free stuff imagine good things will happen???
I didn’t say there weren’t higher spreads, although 50 cents is excessive unless it’s a high-priced stock. What I was emphasizing is that even with small spreads, the commission isn’t the major part of the trading expense.
Obviously, that’s even more true with a higher spread.
“There are no more “seats” on the NY Stock Exchange. All of the seat holders exchanged their “seats” for stock several years ago.”
Cool! Didn’t know that. So, how is access to the market controlled now? They just let anybody plug in and trade?
Most stock trades by brokers are now placed through the one of several electronic exchanges that offers the best price at the time.
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