60. Replay: Order Routing, Market Makers, PFOF and Dark Pools Explained
Nov 1, 2024
Dive into the intriguing world of stock markets, exploring concepts like dark pools and payment for order flow. Discover how market makers ensure price equality while profiting from the bid-ask spread. Learn about the National Best Bid and Offer essential for investors and the complexities of order routing. The hosts also discuss the risks of front running and high-frequency trading, and the critical role of regulations in promoting transparency. Get ready to unravel the mysteries behind the transactions that shape financial markets!
27:06
forum Ask episode
web_stories AI Snips
view_agenda Chapters
auto_awesome Transcript
info_circle Episode notes
insights INSIGHT
NBBO Vs Last Price Explained
The NBBO shows pre-trade price display while the last price is post-trade execution.
Market makers ensure price equality by quoting bid and ask and keeping the spread as profit.
insights INSIGHT
How Market Makers Make Money
Market makers take the other side of trades and earn the spread between bid and ask.
They aim to be delta neutral and profit from trade volume, not directional bets on stock moves.
volunteer_activism ADVICE
Check Execution Quality Reports
Check execution quality and price improvement metrics if you care about trade fills.
Use broker Rule 606 reports to see where orders route and how much price improvement you received.
Get the Snipd Podcast app to discover more snips from this episode
Since we recently learned about Stock Lending, Short Selling, P/E Ratio, and Stock Valuation in the last 2 episodes, we figured it's a good time to revisit our episode on Dark Pools, PFOF, Order Routing, and Market Makers (not to be confused with Market MakeHERS 😉). This also happens to be a Halloween episode from last year, so enjoy our costumes if you're watching the video podcast. 🎃🎃🎃
🔮 Replay of Episode 16
In this episode, Jess Inskip & Jessie DeNuit delve into the complexities of the stock market, focusing on key concepts such as market makers, the bid-ask spread, and dark pools. They explain how orders are processed, the role of market makers in ensuring price equality, and the implications of payment for order flow. The discussion also highlights the importance of understanding these mechanisms to navigate the market effectively and avoid potential pitfalls.
✨Takeaways
Understanding the National Bid and Best Offer (NBBO) is crucial for investors.
Market makers play a vital role in maintaining market liquidity and price equality.
The spread between bid and ask prices is where market makers earn their profit.
Payment for order flow is a common practice among brokerage firms.
Dark pools are designed to prevent market manipulation by concealing large orders.
Investors should be aware of the complexities of order execution and market mechanics.
Regulations exist to ensure transparency in trading practices.
Retail trading refers to individual investors participating in the market.
The stock market is highly regulated, often more so than other industries.
Financial literacy is essential for navigating the stock market effectively.
About Us 🌚🌞 Market MakeHer is an investing education podcast taught by a 15-year finance expert to her friend, a beginner investor. Our mission is to demystify the stock market and make financial literacy accessible to all self-directed investors! We teach complex investing topics in a different way - from "Her" perspective. Important Disclosures: Investing involves risk. There is always potential to lose money when investing in securities. Market MakeHer LLC provides educational content and resources for informational purposes only. We are not registered financial advisors & do not provide personalized investment advice. Consult with a licensed financial advisor before making investment decisions.
Market MakeHer Podcast