-I keep reading that market makers dont like to deal with you if designated pro. Why would they care of theyre getting bid ask spread profits, and hedging?
-Does this hesitancy to trade with pros include orders that add liquidity… mids…or also taking liquidity market orders? Or opposite?
-I read a Reddit comment that if you’re a big trader, to just buy an exchange seat. But how does that help? And there’s 5 or more options exchanges you’d need access to for nbbo best price? (Just curious on this one- not that big a trader).
-Searched Google and only tastytrade says doesn’t apply to futures options, but don’t see that anywhere else. Still true?
390 rule, professional designation issues
byu/thinkofanamefast inoptions
Posted by thinkofanamefast
1 Comment
Market makers prefer to trade against uninformed retail traders as opposed to trade against informed professional traders. The assumption is that if you are entering 390+ trades per day, you have some skill/knowledge/information that gives your orders some positive EV. Market makers don’t want to take the other side of positive EV orders. So instead, they pass on executing against that professional order flow, and let those orders go to the exchange to rest in the order book.
The other thing is, retail customers get very advantageous exchange pricing on their orders. If you are entering/executing a large volume of trades, the assumption is that you’re acting more like a professional, and therefore, exchanges want to charge professional tier fees on your orders. That means far less advantageous maker/taker fees.