I met this experienced trader who was talking about how he was using Nasdaq Level II platform and talking about his strategies and he told me that not every Nasdaq Level II trading platform is same and some of them are fake and some of them are real. According to him, if you utilize the Nasdaq Level II trading platform of Scottrade or Ameritrade and other smaller brokerages, the bids and asks you are seeing on the screen are not necessarily asks and bids of real people but in reality prices are manipulated (marked up) by the brokerage. In other words, when you sell, you are selling 2 or 3 cents less than what the market really bears at that moment. The difference is pocketed by Scottrade. He mentioned that they monitored different Nasdaq Level II platforms at the same time side by side and they had all different prices for the same volumes for the same stocks. He also added that the only true Direct Access platforms (Nasdaq Level II) where George’s bids and asks meet John’s with no middle man manipulation is Fidelity, Terranova, Cybertrade and Tradestation Direct Access Platforms. Can you recommend any brokerages that offers low commissions for unlimited shares and real Nasdaq Level II platform? Any input will be greatly appreciated.
are you sure about what he said the bid and ask not being reflective of the market?
Yes I am sure He was the instructor in a trading workshop and I was the only one questioning him asking questions and sweating him. He has been trading for years and he said he uses Fidelity for cheap because he negotiated the prices. But what shocked me is he showed the news on the projector about how BofA and all other big boys paid billions of dollars for settling charges with the government. Slippage and other words that I can remember. There was even a joke about Helicopters that they used in scottrade’s TV commercial. He said scottrade is the worst because of the prices he has seen in its Level II direct access platform. And yet the SEC doesn’t do anything. I can not believe all these years I have been .ucked anal and I was not aware of it. He also said every weekend 40 thousand people are introduced to trading world by these stupid trading workshops. Unbelievable. I am gonna post the same question in elitetrader.com also.