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[-] PhilipTheBucket@quokk.au 18 points 4 days ago* (last edited 4 days ago)

All orders cost money. If they're not charging you $5 per trade or whatever, then they're taking a lot more than that by selling your "order flow" to someone who's shaving little bits off it by creatively timing when the trades actually are going through and at what exact price.

[-] yo_scottie_oh@lemmy.ml 2 points 4 days ago* (last edited 4 days ago)

This funniness only affects market orders, right? I reckon most retail orders are market orders, just wondering if I understand correctly. If I place a limit order, then I don't have to worry about the $5 I saved on a $0 fee transaction being made up elsewhere, although I suppose the tradeoff is that my order may not be filled at all.

[-] iopq@lemmy.world 2 points 3 days ago

If you make a limit order, but the price drops that same second, it basically becomes a market order - you will pay the market price

[-] PhilipTheBucket@quokk.au 2 points 4 days ago

I'm not super familiar with it, but just knowing the little bit that I know about it, this is my guess:

  • The person who paid for the order flow sees a limit order for max price $45 or whatever.
  • The user's data is delayed by 15 minutes, so they see the current price as $46.
  • The person who paid for order flow looks at the current price (which the user can't see, since their data is 15 minutes delayed).
  • If the current price is $43, they fill the order at $44 and the user feels like they came out ahead and is motivated to keep doing this
  • If the current price is $45, they fill the order at $45, whatever
  • If the current price is $47, they don't fill the order

... and so on. I would bet it's decently more complicated than that, but bottom line, there's a reason these guys are paying all this money for order flows. It's not because they're not making money on them, and usually the procedure is to extract the money from the most-poorly-informed person involved (which in this case is the end user by a big margin).

this post was submitted on 30 Jul 2025
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