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Non-Tech : Market Makers - What They Do and How They Do It
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To: KFE who wrote (178)2/25/1999 11:11:00 PM
From: DanZ  Read Replies (2) of 429
 
Ken,

A broker simply forwards your order to a market maker (in the case of Nasdaq stocks), or a specialist or market maker (in the case of NYSE stocks). Your broker really doesn't have much to do with executions other than the speed with which they send your order to the person who will ultimately make the trade. If you use limit orders, then the only way you can get a poor execution is if the broker was too slow to forward the order and the stock moved beyond your limit price before you got filled.

The only time that I use market orders is if I want in or out of a stock and don't care at what price. That's rare and I usually use limit orders. If you feel like you got ripped off on a market order and the broker sent the order to the market within a reasonable amount of time, then the market maker is the one who you have to blame, not your broker. Most brokers will call market makers and try to get a better fill if they feel like you have a reasonable complaint.

I recall seeing trading software that allows you to buy and sell directly from a Level II screen. According to the information that I read, your order goes directly to the market maker so you have more control over the speed with which your orders get to the trader. I remember that it was fairly expensive and I don't recall how your orders are validated for sufficient funds, etc. Also, you can only use it for Nasdaq stocks. If you want, I'll try to dig up the URL for the site.

Maybe I didn't understand your question? Best of luck.

Dan
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