Are they making money purely off commissions or is there any other way of differentiating yourself from colleagues and earning decent money? The way I see it you gotta take positions ot make real cash but there are some interdealer brokers and some dealers making good money, how would an execution only dealer make a decent living?
As far as I know it is simply through the number of clients and the number of trades, I.E. the more trades, the more cash.
Not sure how it works in the UK or the future markets but, Market Makers on the Nasdaq can also give 'kick backs' to brokers who route their trades through them.
But I am no expert on these things. Maybe someone on the "Trading For A Living" Forum would know better.
Not sure how it works in the UK or the future markets but, Market Makers on the Nasdaq can also give 'kick backs' to brokers who route their trades through them.
But I am no expert on these things. Maybe someone on the "Trading For A Living" Forum would know better.
UK2004 said:
There are hundreds of brokers that give no advice and that do buy and sell either direct through the internet or you can phone in an order (but few traders have time for that of course). .
The one I use, Interactivebrokers, has over $1.4 billion in funds. They make it all from commission - very profitable. They are on the expensive side ($1.00/hundred shares) but popular because of range of markets and good execution. One day last year my commission fees to them was over $400, multiply by over 20,000 clients and you can see that it helps to pay the bills. Of course volume traders go for other brokers where they can get much cheaper commission.
That was my worry ardhill that you can't influence number of trades so you reliant on the broker getting the orders in and being good at winning business. They are earning commissions so you must just get a bit of it yourself, hhmmm not a route to emga money I don't think! lol
ardhill said:
TWI
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Lot of Execution dealers make money on the spread between where the order is placed by client and filled by them vs. where they get filled in their own book.
In some of the Hedge funds that use mechanical systems, their traders earn bonus on getting fills better than the system requests.
In some of the Hedge funds that use mechanical systems, their traders earn bonus on getting fills better than the system requests.
my understanding of execution is only is say for a company that has a system that tells you what to trade, i.e system says buys 5000 lots Mini S&P at 1176 and then you have to buy it at that price (using whatever method to hide your trades, if you need to).
anyway, back to what u asked, say the market is 19/20 and the client says "pay 20 for 5" then sure you can hold that on your "book" if you think the market is going down, but if the market moves up then you will take loss if u can't pay 20 yourself for that sheaaahh.....BUT this is market making instead of execution only!!!!!!!!!!!!!!!! bear that in mind!!!!!!!!
So, client pays 20 for 5, then you are short 5 at 20, you can hold it for a while or just go on the bid at 19 and try and steal a tick.....of cource the market could move and u might have a positon that you dont want, which again boils down to trading, which is not what an execution dealer does.....an execution only dealer will simply do what he is told (depending on market conditons)...I think it boils down to the specifics of the job and company.....
does this help?
anyway, back to what u asked, say the market is 19/20 and the client says "pay 20 for 5" then sure you can hold that on your "book" if you think the market is going down, but if the market moves up then you will take loss if u can't pay 20 yourself for that sheaaahh.....BUT this is market making instead of execution only!!!!!!!!!!!!!!!! bear that in mind!!!!!!!!
So, client pays 20 for 5, then you are short 5 at 20, you can hold it for a while or just go on the bid at 19 and try and steal a tick.....of cource the market could move and u might have a positon that you dont want, which again boils down to trading, which is not what an execution dealer does.....an execution only dealer will simply do what he is told (depending on market conditons)...I think it boils down to the specifics of the job and company.....
does this help?
