371–380 of 434 posts
Ummm, have y'all thought about spread costs? If you look at the spread of any of these ETF's mentioned (spread = ask px - bid px), you will notice that the spread is much smaller than if you were to sum up the spreads of each component stock. That's possible because of a mature ecosystem of ETF market makers and arbitrageurs (like Jane Street). If you buy all of the stocks individually, as it sounds like y'all's solu…
no european customers?
Earlier quoted context omitted.
I'm not talking about you getting a worse price today . Suppose in some other industry, some monopolist consistently sells goods at a loss to drive out all the competition. In the last moments when they are doing this, yes its cheaper for you to buy from the monopolist at that moment. But after everyone is driven out of the market, you'll be paying more. Even though the monopolist is still the cheapest amongst all op…
This example is apples to oranges Imagine you are a market maker: you offer 2 APIs. The first, you allow anyone to trade on. The second, you only allow traders who are doing less than 100k in volume per day (and don't allow users to have multiple accounts) Which API are you able to offer tighter bid/ask spreads on? Why? That's the point. Pfof is saying: the second API is so valuable to me that I'm willing to pay to o…
1. It segments the counterparty they trade with.
2. They get dibs on new orders arriving.
You're only talking about 1. I'm talking about 2.
1 is also bad because this segmentation also gives them inforamtion no-one else can get. But the chain of reasoning to concretely show why its bad (for someone getting their orders PFOF'd) is less obvious and longer.
> Imagine you are a market maker: you offer 2 APIs.
This is so wildly different from how market works. You'll have to clarify what you mean. If the only way to trade is through the API, then you'll offer infinite spread on both. If normal markets exist alongside, then I don't bother using either.
With what other product, service, arbitrage, float, or other mechanism do you intend to make more substantial amounts of money? Knowing what this is would help potential users trust you more. "Ah, that model makes sense" is a more comfortable reaction than "I'm skeptical that this will continue to exist as a going concern that meets anyone's expectations".
Earlier quoted context omitted.
I'd argue the specifics are quite a bit different than Yotta/Synapse. We do not hold any funds ourselves. You connect your bank and ach/wire money to an Apex bank account. You can verify your holdings via apex anytime (see: https://help.double.finance/en/articles/10262406-how-can-i-v... )
Yotta does not hold any funds themselves. You connect your bank and ach/wire money into an Evolve bank account. The problem is that unbeknownst to users, Evolve had no record of what belonged to which user—it all came via Synapse on behalf of Yotta. And when Synapse went bankrupt, everyone pointed fingers about where the money is and who it belongs to.
Evolve not having their own ledge was exactly the problem.
Ummm, have y'all thought about spread costs? If you look at the spread of any of these ETF's mentioned (spread = ask px - bid px), you will notice that the spread is much smaller than if you were to sum up the spreads of each component stock. That's possible because of a mature ecosystem of ETF market makers and arbitrageurs (like Jane Street). If you buy all of the stocks individually, as it sounds like y'all's solu…
I guess rebalancing also creates an ongoing spread-based cost, but it seems like that should be far more minor, at least for broad index funds with low-single-digit turnover.
Earlier quoted context omitted.
So you're hoping get price improvement by crossing with other trader orders in the book? Unless you have a good high frequency predictor and low latency order management (you don't), you're going to experience adverse selection. Either because you're taking resting orders that HFTs are smart enough to avoid or because your resting orders get run over by informed traders.
So you are saying HFT will avoid your market order in this case, while HFT will provide better price when they are the sole counter party in separate liquidity pool? HFT will always maximize profit. To have multiple venues you are just paying HFT as middle man to transfer liquidity from one to another, where you can trade directly with each other if everyone is on one venue, e.g. one centralized limit order book. Tra…
Yes, absolutely. The best feeds (tightest spreads) are only given to specific clients who are requested to trade exclusively with them. If they detect you splitting your orders up between venues, they'll worsen your feed. The feed they'll send to public lit ECNs will generally be their worst (widest spread).
Earlier quoted context omitted.
Thanks, regarding transaction fees, I was referring to slippage (should have said transaction cost). This depends a lot on your customers rebalancing settings, but it would be good to be able to compare that directly to VOO.
Yeah it's an interesting point. Due to the redemption mechanism of ETFs, my understanding is that an ETF's bid-ask spread is basically the weighted average of the bid ask spread of it's underlying holdings. Which to answer your questions means that buying the individual stocks within an ETF would result in approximately the same slippage as buying the ETF itself. "Bid/ask spreads of the underlying securities directly…
Earlier quoted context omitted.
> Even the bank and pensions gamble with your money, its how they move. I wish it wasn't the case either banks don't gamble with your deposit - that's illegal. They use your deposit as a form of security when they loan money out (it takes similar position as equity). Pensions don't gamble, they buy investments which could have some risks (and it's calculated risks). These risks are such that they make a reasonable re…
So if the risk is calculated, it's not gambling? Lottery tickets publish their odds. And in that case, it's actually possible to be confident that the odds are correct. I don't understand.
"taking calculated risk" doesn't mean to calculate the risk. It means to look at whether the risk is worth taking, and only taking those that are worth.
Lottery is a bad risk - so it would be not wise to take lottery risk (as it's got a negative expectation of return).