Trading when you work for a market participant
Ask someone in Human Resources. I seriously doubt you are the first person to ask this question for their company and they should be more than happy to help. There is normally a policy at the organisation that would restrict trades or allow trades under certain conditions. This would be in accordance with the current regulations as well as Institutions own ethical standards.  Typical I have seen is that Technology roles are to extent not considered sensitive, ie the employees in this job function normally do not access sensitive data [unless your role is analyst or production support]. An employee in exempt roles are allowed to trade in securities directly with other broker or invest in broad based Mutual Funds or engage a portfolio management services from a reputed organisation. It is irrelevant that your company only deals with amounts > 1 Million, infact if you were to know what stock the one million is going into, you may buy it slightly earlier and when the company places the large order, the stock  typically moves upwards slightly, enough for you to make some good money. That is Not allowed. But its best you get hold of a document that would layout the do' and don't in your organisation. All such organisation are mandated to have a written policy in this regard.
Retail brokers and are generally not members of exchanges and would generally not be members of exchanges unless they are directly routing orders to those exchanges. Most retail brokers charging $7 are considered discount brokers and such brokers route order to Market Makers (who are members of the exchanges). All brokers and market makers must be members of FINRA and must pay FINRA registration and licensing fees.  Discount brokers also have operational costs which include the cost of their facilities, technology, clearing fees, regulation and human capital. Market makers will have the same costs but the cost of technology is probably much higher. Discount brokers will also have market data fees which they will have to pay to the exchanges for the right to show customer real time quotes.  Some of their fees can be offset through payment for order flow (POF) where market makers pay routing brokers a small fee for sending orders to them for execution. The practice of POF has actually allowed retail brokers to keep their costs lower but to to shrinking margins and spread market makers POF has significantly declined over the years.  Markets makers generally do not pass along Exchange access fees which are capped at $.003 (not .0035) to routing brokers.  Also note that The SEC and FINRA charges transactions fees. SEC fee for sales are generally passed along to customers and noted on trade confirms. FINRA TAF is born by the market makers and often subtracted from POF paid to routing firms. Other (full service brokers) charging higher commissions are charging for the added value of their brokers providing advice and expertise in helping investors with investment strategies. They will generally also have the same fees associated with membership of all the exchanges as they are also market makers subject to some of the list of cost mentioned above.  One point of note is that Market Making technology is quite sophisticates and very expensive.  It has driven most of wholesale market makers of the 90s into consolidation.    Retail routing firm's save a significant amount of money for not having to operate such a system (as well as worry about the regulatory headaches associated with running such a system).  This allows them to provide much lower commissions that the (full service) or bulge bracket brokers. I'm going to assume that you want to be invested all the time and each trade consists in selling a security and buying another one (similar to your example). How much commissions you are willing to pay depends on several factors, but one way to think about it is as follows. You have a position in stock A and you want to switch to stock B because you think it will perform better. If you think there's a good chance (>50%) that B will outperform A by more than x% then you can happily pay up to x/2% commissions and still make money over a long time horizon. If you like formulae, one way to express it is: Where: Example: if you tend to be right 51% of the time (hit rate), and gain 110% more than you lose on average (win loss ratio), you can see that your expected profit is: 5.1% - commissions, so you could pay 2.5% commissions on entering and closing the position and still make money*. Unfortunately, common sense, statistics and numerous studies tell us a sad truth: on average, people have a hit rate of 50% and a win/loss ratio of 100%. Which means that their expected profit per trade is 0% - commission. Based on that crude observation - unless you can prove to yourself that you are better than average - you should aim at reducing commissions paid to your broker as much as possible through: * 51% and 110% are not random numbers, they correspond to the results of the top 15% (professional) managers in a research paper using a sample of 215 funds managing $150bn. "As the other answer said, the person who owns the lent stock does not benefit directly.  They may benefit indirectly in that brokers can use the short lending profits to reduce their fees or in that they have the option to short other stocks at the same terms.   Follow-up question: what prevents the broker lending the shares for a very short time (less than a day), pocketing the interest and returning the lenders their shares without much change in share price (because borrowing period was very short). What prevents them from doing that many times a day ? Lack of market.   Short selling for short periods of time isn't so common as to allow for ""many"" times a day.  Some day traders may do it occasionally, but I don't know that it would be a reliable business model to supply them.  If there are enough people interested in shorting the stock, they will probably want to hold onto it long enough for the anticipated movement to happen.   There are transaction costs here.  Both fees for trading at all and the extra charges for short sale borrowing and interest.  Most stocks do not move down by large enough amounts ""many"" times a day.  Their fluctuations are smaller.  If the stock doesn't move enough to cover the transaction fees, then that seller lost money overall.  Over time, sellers like that will stop trading, as they will lose all their money.   All that said, there are no legal blocks to loaning the stock out many times, just practical ones.  If a stock was varying wildly for some bizarre reason, it could happen." There is no one answer to this question, but there are some generalities. Most exchanges make a distinction between the passive and the aggressive sides of a trade.  The passive participant is the order that was resting on the market at the time of the trade.  It is an order that based on its price was not executable at the time, and therefore goes into the order book.  For example, I'm willing to sell 100 shares of a stock at $9.98 but nobody wants to buy that right now, so it remains as an open order on the exchange. Then somebody comes along and is willing to meet my price (I am glossing over lots of details here).  So they aggressively take out my order by either posting a market-buy, or specifically that they want to buy 100 shares at either $9.98, or at some higher price. Most exchanges will actually give me, as the passive (i.e. liquidity making) investor a small rebate, while the other person is charged a few fractions of a cent.  Google found NYSEArca details, and most other exchanges make their fees public as well.  As of this writing the generic price charged/credited: But they provide volume discounts, and many of the larger deals do fall into another tier of volume, which provides a different price structure. Yea that example is a little skewed when you made the aum differ by 200%. Those two candidates would never apply for the same role.  Networking is essential to get you looked at but at the end of the day it is still all about risk adjusted pnl.  Not to mention that pnl is really all you have to judge a trader "The risk of market orders depends heavily on the size of the market and the exchange. On big exchange and a security which is traded in hue numbers you're likely that there are enough participants to give you a ""fair"" price. Doing a market order on a security which is hardly dealed you might make a bad deal. In Germany Tradegate Exchange and the sister company the bank Tradegate AG are known to play a bit dirty: Their market is open longer than Frankfurt (Xetra) and has way lower liquidity. So it can happen that not all sell or buy orders can be processes on the Exchange and open orders are kept. Then Tradegate AG steps in with a new offer to full-fill these trades selling high or buying low. There is a German article going in details on wiwo.de either German or via Google Translate" I would say it's a bit more complicated than that. Do you understand what a market maker does?  An ECN (electronic communication network) is a virtual exchange that works with market makers. Using a rebate structure that works by paying for orders adding liquidity and charges a fee for removing liquidity. So liquidity is created by encouraging what are essentially limit orders, orders that are outside of the current market price and therefore not immediately executable. These orders stay in the book and are filled when the price of the security moves and triggers them.  So direct answer is NYSE ARCA is where market makers do their jobs. These market makers can be floor traders or algorithmic. When you send an order through your brokerage, your broker has a number of options. Your order can be sent directly to an ECN/exchange like NYSE ARCA, sent to a market making firm like KCG Americas (formerly Knight Capital), or internalized. Internalization is when the broker uses an in house service to execute your trade. Brokerages must disclose what they do with orders. For example etrade's. https://content.etrade.com/etrade/powerpage/pdf/OrderRouting11AC6.pdf This is a good graphic showing what happens in general along with the names of some common liquidity providers. http://www.businessweek.com/articles/2012-12-20/how-your-buy-order-gets-filled "There are a few people that do this for a living. They are called ""market makers"" or ""specialists"" in a particular stock. First of all, this requires a lot of capital. You can get burned on a few trades, a process known as ""gambler's ruin,"" but if you have enough capital to weather the storm, you can make money. Second, you have to be ""licensed"" by the stock market authorities, because you need to have stock market trading experience and other credentials. Third, you are not allowed to buy and sell at will. In order to do your job, you have to ""balance the boat,"" that is buy, when others are selling, and sell, when others are buying, in order to keep the market moving in two directions. It's a tough job that requires a lot of experience, plus a license, but a few people can make a living doing this." Can't totally agree with that. Volatility trading is just one trading type of many. In my opinion it doesn't depend on whether you are a professional trader or not.  As you might have heard, retail traders are said to create 'noise' on the market, mainly due to the fact that they aren't professional in their majority. So, I would assume, if an average retail trader decided to trade volatility he would create as much noise as if would have been betting on stock directions. Basically, most types of trading would require a considerable amount of effort spent on fundamental analysis of the underlying be it volatility or directional trading. Arbitrage trading would be an exception here, I guess. However, volatility trading relies more on trader's subjective expectations about future deviations, whereas trading stock directions requires deeper research of the underlying. Is it a drawback or an advantage? I.d.k. On the other hand-side volatility trading strategies cover both upward and downward movements, but you can set similar hedging strategies when going short or long on stocks, isn't it? To summarise, I think it is a matter of preference. Imagine yourself going long on S&P500 since 2009. Do you think there are many volatility traders who have outperformed that? "Does your job give you access to ""confidential information"", such that you can only buy or sell shares in the company during certain windows?  Employees with access to company financial data, resource planning databases, or customer databases are often only allowed to trade in company securities (or derivatives thereof) during certain ""windows"" a few days after the company releases its quarterly earnings reports.  Even those windows can be cancelled if a major event is about to be announced.  These windows are designed to prevent the appearance of insider trading, which is a serious crime in the United States. Is there a minimum time that you would need to hold the stock, before you are allowed to sell it?  Do you have confidence that the stock would retain most of its value, long enough that your profits are long-term capital gains instead of short-term capital gains? What happens to your stock if you lose your job, retire, or go to another company? Does your company's stock price seem to be inflated by any of these factors: If any of these nine warning flags are the case, I would think carefully before investing. If I had a basic emergency fund set aside and none of the nine warning flags are present, or if I had a solid emergency fund and the company seemed likely to continue to justify its stock price for several years, I would seriously consider taking full advantage of the stock purchase plan.  I would not invest more money than I could afford to lose. At first, I would cash out my profits quickly (either as quickly as allowed, or as quickly as lets me minimize my capital gains taxes).  I would reinvest in more shares, until I could afford to buy as many shares as the company would allow me to buy at the discount. In the long-run, I would avoid having more than one-third of my net worth in any single investment.  (E.g., company stock, home equity, bonds in general, et cetera.)" The key word you forgot to include from Slide 29 is: Free-Riding Investopedia defines free-riding as: In the context of a brokerage firm, a free rider problem refers to a situation where a client has been allowed to purchase shares without actually paying for them, and then subsequently sells the shares (ideally for profit). The problem with this scenario is that the client, if allowed to free ride, can profit from a stock trade without actually using any of his or her own capital. This is illegal. I have not heard of any issues with this type of action being a problem with trading accounts in Australia, nor have I been able to find any such rules on the ASX website or any of by brokers websites. So I think this may be an issue in the USA but not Australia. You should check the rules in any other countries you wish to trade in. Yes, you would have to report the gain. It is not relevant that you traded the stock previously, you still made a profit on the trade-at-hand. Imagine if for some reason this type of trade were exempt. Investors could follow the short term swings of volatile stocks completely tax-free. You or the broker place an order to buy the share with the stock exchange. There has to be a matching sell order by someone.  Once a match is made, you pay the money and get the share. "You avoid pattern day trader status by trading e-mini futures through a futures broker. The PDT rules do not apply in the futures markets. Some of the markets that are available include representatives covering the major indices i.e the YM (DJIA), ES (S&P 500) and NQ (Nasdaq 100) and many more markets.  You can take as many round-turn trades as you care to...as many or as few times a day  as you like. E-mini futures contracts trade in sessions with ""transition"" times between sessions. -- Sessions begin Sunday evenings at 6 PM EST and are open through Monday evening at 5 PM EST...The next session begins at 6 pm Monday night running through Tuesday at 5 PM EST...etc...until Friday's session close at 5 PM EST. Just as with stocks, you can either buy first then sell (open and close a position) or short-sell (sell first then cover by buying). You profit (or lose) on a round turn trade in the same manor as you would if trading stocks, options, ETFs etc. The e-mini futures are different than the main futures markets that you may have seen traders working in the ""pits"" in Chicago...E-mini futures are totally electronic (no floor traders) and do not involve any potential delivery of the 'product'...They just require the closing of positions to end a transaction.  A main difference is you need to maintain very little cash in your account in order to trade...$1000 or less per trade, per e-mini contract...You can trade just 1 contract at a time or as many contracts as you have the cash in your account to cover.   ""Settlement"" is immediate upon closing out any position that you may have put on...No waiting for clearing before your next trade.  If you want to hold an e-mini contract position over 2 or more sessions, you need to have about $5000 per contract in your account to cover the minimum margin requirement that comes into play during the transition between sessions... With the e-minis you are speculating on gaining from the difference between when you 'put-on' and ""close-out"" a position in order to profit. For example, if you think the DJIA is about to rise 20 points, you can buy 1 contract. If you were correct in your assessment and sold your contract after the e-mini rose 20 points, you profited $100. (For the DJIA e-mini, each 1 point 'tick' is valued at $5.00)" It's a covered call.  When I want to create a covered call position, I don't need to wait before the stock transaction settles. I enter it as one trade, and they settle at different times.