China Growth Stocks

[CSykes]

The fee structure is pretty simple. You pay $7.95 per trade plus ECN fees if any.

Here are the ECN fee break downs for my particular trading platform..

http://www.nobletrading.com/commissions_fees.php

An Example:

Lets say I am trading stock XYZ. The bid is $1.00 and the ask is $1.05.

Most market makers do not charge an ECN fee if you "add liquidity". What that means is, you are buying stock at the bid, or selling stock at the ask. Removing liquidity is when you sell on the bid, or buy on the ask.

So if I buy 10,000 shares through ARCA of XYZ and I pay the offer price, I am removing liquidity. So I am charged $.004 X 10,000 shares + $7.95 or $47.95 total cost. If I want to use ARCA but not pay the ECN fee I must always buy on the bid.. sell on the ask.

Now, the purpose of an ECN is to give you "direct access" to a number of market makers. Pretty much all orders through retail brokers must first get processed through the broker.. then on to the MM. This causes delays, especially if the market is moving fast. Your brokers system can get overloaded etc..

Retail brokers do their own clearing for the most part, that is why they must first route the order through their system, then place it with the MM. Also in most cases you don't have a route choice.

When using a direct access system, you route directly to the "order flow" or "book" of the market maker you choose. Your platform records the trade and passes it on to your clearing house which is processed later that night. (Nobletrading uses Penson)

A major advantage of direct access trading is that you can route directly to any market maker you wish. If there is one particular MM that is very active on a stock, you can route directly to that MM for fastest execution. They will not put your order into queue like they do retail, you get priority over retail. So in a fast moving market.. it can sometimes mean the difference between a profit or a loss.

People serious about day trading need every advantage they can get. Retail brokers simply do not have the tools, or execution to beat an ECN. They are fine for regular traders/investors but when you are making 100's a trades a day for $.01 spreads for $50 and $75 trades.. you need fast execution. Your selling almost the minute you buy in some cases.