Mephistopheles Posted December 23, 2015 Share Posted December 23, 2015 This is a two part question: 1. Do you generally add liquidity or remove it when you trade? I just found out what these terms mean today, so for those who don't know: "add liquidity" means to put in a buy order below the ask or sell order above the bid, and "remove liquidity" means to do the opposite. I assume that a healthy number of people here add liquidity given this is a value investing forum. I generally remove it given I am usually trading in very liquid large caps and tend to buy when a stock is collapsing; so I usually just take whatever the market is giving me in a hurry before the deals disappear. 2. For those who trade with IB, do you use a tiered or fixed cost commission structure? They say tiered is beneficial for very high volumes (millions of shares per month), or if you're generally adding liquidity depending on the exchange, because this latter method will earn you rebates. My volumes won't be anywhere near the volume necessary for tiered to be cheaper than fixed, but I am trying to figure out whether it's worth trading by "adding liquidity" to save on commissions vs. the fixed cost. I haven't done the math, mainly bc there are a handful of different fees for tiered, and fees vary for each exchange. But my question for those who know is - a) do you receive rebates for all NYSE and NASDAQ trades if you add liquidity, and do these rebates make the tiered structure worth it? b) Is avoiding "removing liquidity" worth the savings in fees? Link to comment Share on other sites More sharing options...
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!Register a new account
Already have an account? Sign in here.Sign In Now