Just something else to watch out for with online brokers who route the orders.
And something else to beware of, along the same lines. Some of my orders go through Discover, which routes orders to NITE, MASH, BRUT among others. I have placed orders to sell, for example, at a price, say 20 1/2, which is the bid. A minute after I place the order with Discover, the order shows up on Level 2 with NITE who bids 20 1/2 on my behalf. The stock trades at 20 1/2 and I'm not executed and NITE is still sitting there. Then a torrent orders are filled at 20 1/2 and suddenly NITE is bidding 20 5/8 along with others. Aha! I say...i must be filled. Then suddenly the price starts to drop. And is 20 1/4 . 3/8. I say PHEW! I'm glad I must have sold. But, after calling Discover, they say 'no fill'.
After producing 'Time and Sales' and telling them that the order MUST be executed, because NITE was biddding 5/8 after all of the 20 1/2 sales went through (incidentally, they are usually dumbfounded that I know that it's NITE, because the Discover brokers don't have Level 2), they do some checking. "You're right, you were filled" has always been the case. EVERY TIME. I had caught NITE red-handed. I only use NITE as one example. It has also happened with the others they route to.
The moral: You have to watch these guys like a hawk, because they steal your orders all the time. If I hadn't had Level 2, I would never have known that NITE had upped their bid through my price. Unfortunately, most public traders don't have Level 2 and don't even know they are being taken to the cleaners. |
