Looking for Advice for Trading at Interactive Brokers and Discount Brokers

[jmp8822]

Is there something I should read about trading in today's world online? By trading, I mean that I buy a few different stocks a year, which I tend to hold for about a year or so. Also, I tend to buy lower liquidity names, where I might like to buy 10 or 20-percent of volume in a given day.

 

Regarding IB, I have started using the Accumulate/Distribute algorithm on the desktop trading program, which seems to work okay for me. But I've realized I generally don't feel very educated about placing trades. Does anyone have any tips for buying volume in somewhat thin smaller caps or just general IB trading tips?  Is there something specific I should read?  I have trouble figuring out the best things to know for someone like me (which I would guess applies to many on this board) who trades infrequently but wants to get the most volume at the best price. Maybe there isn't much to know here, but just in case I thought I would reach out to the board.

 

Regarding retail brokers, (I'm currently using Merrill Edge) does anyone have tips for getting more volume without scaring the computers? I say scaring the computers because it seems like I put up a limit of 1,000 shares at X price maybe a penny from the trading price, and never get filled? Looking for some tips here too where you can't hide your volume.

[rb]

Ok here are a few tips. Use IB and leave the other brokers alone. IB doesn't sell your flow and most other brokers do which will kill you on the thinly traded stuff.

 

On the liquid names you don't need to worry to much. Maybe you'll pay a penny more per share so unless you're dealing with millions and millions it won't be a big deal. You'll generally get good fills.

 

On the thinly traded stuff. Never put in a market order. Use only limit orders. Break your order into small pieces. Try to do one lot at a time. Try to do full lots. If you put in an order of 1,000 shares you can kiss your execution goodbye. If you're looking to get a lot of shares sometimes it's worth it to pay up and hit the ask with a limit order. Especially if the ask size is high like 5-7 lots. But if the ask size is high like 7 lots don't go with an 7 lot order at midpoint or something like that. The ask won't come down it'll move away. If you want to go midpoint it's a 1 lot limit order.

 

You've gotta be cagey with the thinly traded stuff. Use level 2 quotes. Try to understand the market and who's in it. There probably won't be more than 4 real players there. The rest are bullshit algos. Try to deal with the real players who actually need to move stock. If you have a lot of time on your hands and start to know what you're doing you can fuck around with the algos. They're not that smart and you can fool them. It won't make you that much money but it can be a little fun and gratifying to flip the bird to AI. Flesh, blood, and brains baby!